Tuesday Jun 16, 2026
Tuesday Jun 16, 2026
Tuesday, 16 June 2026 04:14 - - {{hitsCtrl.values.hits}}
Sri Lanka’s economy grew 5.1% in the first quarter of 2026, up from 4.8% in the December 2025 quarter, according to data released by the Department of Census and Statistics (DCS) yesterday.
1Q 2026 was particularly challenging. The period covered the first two months (January and February 2026) after the devastating Ditwah Cyclone and the first full month of the US-Israel war on Iran (March).
However, while lower than the 5.4% growth in 3Q 2025, it was higher than the 4.9% 2Q and 4.8% 1Q growth rates of 2025. In fact, the 1Q 2026 growth rate was the highest for the first quarter since 2021.
Issuing a communiqué on the release of National Accounts Estimates, the DCS stated that the GDP growth rate for 1Q 2026 has been estimated at 5.1% positive growth. Accordingly, the GDP of Sri Lanka at constant prices (2015) increased to Rs. 3,652,503 million from Rs. 3,476,664 million recorded in 1Q 2025.
In addition, the GDP of Sri Lanka for 1Q 2026 at current prices increased to Rs. 9,164,652 million from Rs. 8,253,485 million, registering an 11% increase.
The three major economic activities of the economy, Agriculture, Industry, and Services, contributed to the GDP by 7.3%, 27.2%, and 54.2%, respectively, while taxes less subsidies on products accounted for 11.3% of GDP during 1Q 2026.
All three major economic activities expanded during the quarter, with Agriculture, Industry and Services growing by 1.1%, 7.2%, and 3.4% respectively.
According to the DCS, Sri Lanka’s economy continued its recovery momentum despite challenges stemming from the aftermath of Cyclone Ditwah and renewed geopolitical tensions in the Gulf region.
The DCS noted that import volumes increased by around one-fifth compared to the corresponding quarter of the previous year, facilitating domestic production by providing capital and intermediate goods. Construction activities and goods and passenger transport activities were identified as key drivers behind the increase in imports, while mining and quarrying activities also recorded strong growth. Increased trade volumes, a larger vehicle fleet, and lower interest rates supported the expansion of insurance and financial services activities during the quarter.
In 1Q 2026, overall agricultural activities expanded by 1.1%, compared to a 1.3% contraction recorded in the corresponding quarter of 2025.
Agricultural growth was supported by strong expansions in the growing of oleaginous fruits including coconuts (64.8%), plant propagation (18.7%), forestry and logging (15%), growing of vegetables (3.6%), growing of fruits (2.3%), growing of spices (1.7%), and agricultural supporting activities (0.9%).
However, several agricultural activities recorded declines during the quarter. Freshwater fishing and freshwater aquaculture contracted by 37.8%, marine fishing and marine aquaculture by 25.7%, growing of rubber by 13.6%, growing of sugar cane and tobacco by 6.7%, growing of rice by 5.8%, animal production by 4.2%, growing of tea by 3.6%, growing of cereals by 3.4%, growing of coffee, cocoa and other beverage crops by 2.3%, and growing of other perennial crops by 1.1%.
Overall industrial activities expanded by 7.2% in 1Q 2026, compared to a 9.8% growth in the corresponding quarter of 2025.
Among industrial activities, construction grew by 16.3%, while mining and quarrying expanded by 19.5%. Manufacturing activities as a whole recorded a growth of 2.8%.
Manufacturing growth was supported by expansions in manufacture of chemical products and basic pharmaceutical products (22.8%), manufacture of basic metal and fabricated metal products (19.4%), manufacture of other non-metallic mineral products (12.9%), manufacture of wood and wood products (6.6%), manufacture of food, beverages and tobacco products (5.8%), manufacture of furniture (2%), and manufacture of paper and paper products (1.1%).
Meanwhile, manufacture of rubber and plastic products declined by 16.8%, other manufacturing and repair and installation of machinery and equipment by 13.9%, manufacture of textiles, wearing apparel, leather and related products by 3.7%, manufacture of machinery and equipment by 2.5%, and manufacture of coke and refined petroleum products by 1.3%.
Electricity, gas, steam, and air conditioning supply expanded by 7.5%, while water collection, treatment, and supply grew by 11.4% and sewerage, waste treatment, and disposal activities increased by 2.8% during the quarter.
The services sector expanded by 3.4% in 1Q 2026, compared to a 2.7% growth in the corresponding quarter of 2025.
Growth in services was led by insurance, reinsurance and pension funding, which expanded by 22%, followed by IT programing consultancy and related activities at 16.1% and financial services activities at 12.8%.
Postal and courier services grew by 5.8%, accommodation, food and beverage serving activities by 5.4%, telecommunications by 4.6%, transportation of goods and passengers including warehousing by 3.6%, real estate activities and ownership of dwellings by 2.9%, programing and broadcasting activities by 2%, wholesale and retail trade by 1.5%, human health services by 1%, professional services by 0.8%, other personal services by 0.8%, and education by 0.7%.
Public administration and defence was the only services activity to contract, declining by 1.2% during 1Q 2026.
