Sri Lanka’s economy expanded by 4.9% year-on-year in the second quarter of 2025, reflecting signs of sustained recovery from the country’s worst economic crisis in decades. According to the Department of Census and Statistics, GDP at constant 2015 prices reached Rs. 2,883 billion, compared with Rs. 2,749 billion in the same period last year. Growth was driven by a 5.8% rise in industry, a 3.9% expansion in services, and a 2% increase in agriculture.

The island nation plunged into an economic meltdown in 2022, marked by depleted foreign reserves, runaway inflation, and shortages of fuel and medicines. A sovereign default that year pushed Sri Lanka into negotiations with international lenders, leading to an IMF-supported stabilisation programme. Since then, the government has implemented austerity measures, restructured debt, and improved foreign exchange inflows through tourism and remittances. While challenges, including high living costs and debt repayment, remain, the latest figures indicate a more stable footing for the economy after years of contraction.