Sri Lanka’s economic growth forecast for 2025 has been modestly reduced, according to the Asian Development Bank’s latest Asian Development Outlook (July 2025). The revision reflects broader regional adjustments influenced by new US tariff policies.
The report notes that Sri Lanka experienced broad-based growth in the first quarter of 2025. However, uncertainties over US tariffs have weighed on trade prospects, prompting a downward adjustment.
Additionally, the ADB highlighted risks on the horizon for 2026, particularly regarding the potential under-execution of capital spending.
“Economic growth in Sri Lanka was broad- based in Q1 2025, but growth forecasts have been revised down, with US tariff uncertainty weighing on 2025 and risks from under execution of capital spending affecting the 2026 outlook,” the report said.
Regionally, South Asia’s growth has been revised to 5.9%, driven by similarly cautious forecasts in India, where US trade policies have also reduced outlooks. (Islandnews)
