IMF forecasts Sri Lanka’s economic growth at 3.7% in 2027

The International Monetary Fund (IMF), in its latest World Economic Outlook report, has projected Sri Lanka’s economic growth rate at 4% in 2026 and 3.7% in 2027, indicating a gradual moderation in economic expansion over the next year.

According to the IMF’s October 2026 report, titled World Economic Outlook: Resilience Under Strain, Urgent Choices, Sri Lanka’s economy is projected to grow at a slower pace compared to the 5% growth recorded in 2025.

The report also forecasts Sri Lanka’s inflation rate at 5.3% in 2026 and 5.4% in 2027, compared to the negative inflation rate of 0.5% recorded in 2025.

Meanwhile, Sri Lanka’s current account balance is projected to record a deficit of 0.5% of GDP in 2026, followed by a deficit of 0.3% in 2027, compared to a surplus of 1.6% in 2025.

The IMF has also projected Sri Lanka’s unemployment rate to remain steady at 3.9% in both 2026 and 2027.

On the global front, the IMF expects economic growth to moderate from 3.5% in 2025 to 3.1% in 2026, before recovering to 3.4% in 2027.

The Fund noted that global economic activity has remained relatively resilient despite ongoing conflict in the Middle East, trade tensions and rising energy costs.

However, it warned that the global outlook remains uneven, with countries facing different levels of exposure to energy price shocks, geopolitical uncertainty and changes in global demand.

The IMF also projects growth in emerging markets and developing economies to slow to 3.7% in 2026 before recovering to 4.4% in 2027.

Among major economies, the United States is expected to grow by 2.3% in both 2026 and 2027, while China’s growth is projected at 4.5% this year. India’s economy is forecast to expand by 7% in 2026.

Meanwhile, global inflation is expected to increase from 4.1% in 2025 to 4.7% in 2026, before easing to 4.1% in 2027, largely reflecting the impact of higher energy and food prices.

The IMF warned that prolonged conflict in the Middle East, disruptions to energy supplies, trade uncertainty and financial vulnerabilities could pose further risks to global economic stability.

It also emphasised the importance of rebuilding fiscal buffers, strengthening energy security and maintaining sound economic policies to support sustainable growth.

Full report : https://www.imf.org/-/media/files/publications/weo/2026/october/english/text.pdf  (Newswire)

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