• 61.1% of population lived on less than $ 8.3 a day in 2025
• Share projected at 55.7% in 2028

Close to six in 10 Sri Lankans live below the World Bank’s (WB) poverty line for upper-middle-income countries, just three months after the bank upgraded Sri Lanka to that income group.

The bank’s latest Sri Lanka Development Update estimates that 61.1% of the population lived on less than $ 8.3 a day at 61.1% in 2025. It projects that the share will remain high at 55.7% in 2028.

The bank said that the July reclassification reflected average national income, not its distribution, and should not be read as evidence of a broad recovery.

“What we have seen is recovery at the macroeconomic level that has not yet fully translated into recovery for ordinary families,” World Bank Acting Country Manager for Sri Lanka Stephan Massing told reporters in Colombo.

The bank also sharply revised down its estimate of crisis-era poverty under a new methodology. At the $ 4.2-a-day line, poverty peaked at 20.7% in 2023, against 27.6% previously estimated. The 2025 figure was revised to 16.9% from 22.1%. 

At the national poverty line, meanwhile, the 2023 peak was revised from 31.4% to 24%.

The bank said that the revision reflected better measurement, not improved living conditions. Poverty still roughly doubled between 2019 and 2023, pushing about two million people below the line, and remains above the pre-crisis rate of 11.5%.

Overall, two in five Sri Lankans are poor or at risk of falling into poverty.

The revised estimate uses the annual Labour Force Survey instead of national accounts data. It is not an official statistic; the Department of Census and Statistics’ Household Income and Expenditure Survey remains the benchmark, with 2025 data due in 2027.

The economy has grown for 12 consecutive quarters, expanding 4.7% in the first half of 2026. The World Bank raised its 2026 growth forecast to 4.4% from 3.6%.

However, households have not kept pace. Real labour incomes fell by more than 40% between 2019 and 2023 and real wages remain about 12% below 2019 levels. Income growth stalled again this year as inflation rose from 2.2% in March to 8% in August.

Stunting among children under five rose from 7.4% in 2021 to 10.1% in 2025.

Poverty outside the Western Province is two to three times higher than within it and reaches 36% in the estate sector.

Poverty is projected to fall to 15.8% this year and 14% by 2028, remaining above pre-crisis levels.

“Sri Lanka’s story for the last four years has been one of recovery,” Massing said. “The story for the next four years should be one of opportunity.”

– By Priyanwada Abeyrathna