• Dy Finance Minister claims highest since 2021

Deputy Finance and Planning Minister Dr Anil Jayantha Fernando said Sri Lanka recorded a 5.1 per cent economic growth in the first quarter of this year, with the industrial sector contributing the most to the expansion despite setbacks in agriculture caused by cyclone Ditwah.

Commenting on the latest economic growth figures released by the Census and Statistics Department during a media briefing yesterday (17), he said that the performance demonstrated that the economy had moved beyond stabilisation and is now laying the foundation for sustained growth and development.

He said that the country had faced several challenges during the period, including the impact of Ditwah and the economic shock created by the conflict in the Middle East (ME). At the same time, he claimed that various groups had continuously attempted to create fear in society by suggesting that the economy is on the verge of another crisis. "We have heard predictions since this Government took office that the economy would collapse today or tomorrow. The economic data clearly shows that those claims are unfounded," he said.

According to him, the 5.1 per cent growth recorded in the first quarter is the highest first-quarter growth rate since 2021 and represents a significant achievement considering both domestic and external challenges. He said that the industrial, services and agricultural sectors all contributed to economic growth, with the industrial sector recording the strongest performance at 7.2 per cent. Within the industrial sector, mining and quarrying grew by 19.5 per cent, construction by 16.3 per cent, water supply by 11.4 per cent, and electricity generation by 7.5 per cent. Dr Fernando acknowledged that the agricultural sector had recorded comparatively lower growth due to the damage caused by Ditwah.

He noted that tea, livestock production and paddy cultivation contracted during the period, although several other agricultural activities posted positive growth. Coconut cultivation expanded by 64.8 per cent, while vegetable production grew by 3.6 per cent. He said that the services sector also performed strongly, with insurance services recording the highest growth at 22 per cent, followed by information technology (IT) at 16.1 per cent, financial services at 12.5 per cent, accommodation and food and beverage (F&B) services at 5.4 per cent, and transportation services at 3.6 per cent.

He attributed the overall economic performance to the Government's policy decisions and prudent financial management in the face of natural disasters and external shocks. He said that the Government had maintained strong revenue collection throughout last year (2025), enabling it to build a substantial financial buffer. As a result, he said that an additional Rs. 500 billion had been allocated through supplementary estimates to meet unforeseen expenditure without reducing funds already allocated under the Budget.

He noted that some analysts had forecast economic growth of around 3%, expecting the economy to slow following Ditwah. Instead, he said that the Government had increased spending to support the affected communities and maintain economic activity. He added that financial assistance had been provided for families affected by the loss of life and property, crop damage, the needs of schoolchildren, damaged businesses, and the restoration of infrastructure, including roads and railway lines. He further said that the Government had also allocated an additional Rs. 100 billion to address the economic impact of the conflict in the ME.

"When crises emerged, we managed them without allowing the economy to weaken and at the same time provided relief to the people. The results of those decisions are reflected in the economic growth figures that we see today," he said.

He said that the Government remains highly positive and optimistic that Sri Lanka will continue its current economic trajectory as planned. He said that the first-quarter economic growth rate of 5.1% indicates that the country is moving along the expected path towards achieving the medium-term target of inclusive and sustainable economic growth of 7%. However, he clarified that this does not mean that Sri Lanka is expected to achieve 7% economic growth in 2026, as it is a medium-term target. He said that gradual growth improvements, such as 5.1% and 5.5%, would contribute towards maintaining the planned economic trajectory. Dr Fernando said that achieving this target is essential to addressing the long-standing issue of poverty, developing the economy, reducing income inequality, and improving living standards for everyone.