The World Bank has projected a slowing of Sri Lanka’s economic recovery in 2025, with growth projected to ease to 3.5%. According to the World Bank’s latest Global Economic Prospects report, the deceleration follows a modest rebound in 2024, driven by gains in industrial output and construction.

The report adds that structural weaknesses and global uncertainties now threaten to stall progress.

The World Bank cited lingering effects from Sri Lanka’s recent economic crisis and external challenges as key factors behind the downgrade. In contrast, neighbouring South Asian economies are expected to perform better: India is forecast to grow by 6.3% in FY2025/26, while Bangladesh is projected to expand by 4.9%.

Notably, Pakistan is also expected to grow at a slow pace of 3.1%.

The report warns of downside risks for the region, including global trade tensions, financial tightening, and climate-related disruptions. For Sri Lanka, sustained recovery will depend on structural reforms, improved debt management, and greater resilience to external shocks.