By Economic Affairs Division – TheCapitalist.lk Institute of Policy & Enterprise
Sri Lanka’s economy grew by 4.9% in the second quarter of 2025, compared to the same period last year, according to official data released by the Department of Census and Statistics. The performance highlights a notable recovery in industry and services, despite mixed results in the agricultural sector.
Sectoral Breakdown
- Agriculture recorded modest growth of 2.0%, with positive gains in animal production (+13.9%), tea (+6.0%), and paddy (+5.0%), though some sub-sectors such as vegetables (-3.6%) and marine fishing (-5.2%) contracted.
- Industry surged by 5.8%, bolstered by strong expansions in mining & quarrying (+16.6%), construction (+8.5%), electricity (+5.3%), and water collection (+5.8%), while manufacturing grew at a slower 3.7% pace.
- Services, the backbone of Sri Lanka’s economy, grew by 5.9%. Standout performers included IT/BPO services (+18.7%), financial services (+12.3%), postal & courier (+11.6%), and accommodation & food (+10.3%), reflecting resilience in export-oriented and consumer-driven segments.
Contribution to GDP
- Services: 52.8%
- Industry: 25.1%
- Agriculture: 10.1%
- Taxes less subsidies on products: 12.0%
This sectoral composition underscores Sri Lanka’s continuing dependence on services, with industry providing a significant secondary boost.
GDP at Constant Prices (Q2, 2019–2025)
Sri Lanka’s GDP at constant (2015) prices rose to Rs. 2,884 billion in Q2 2025, up from Rs. 2,750 billion in Q2 2024. While still below the pre-crisis 2019 peak of Rs. 3,067 billion, the steady upward trajectory since 2022 signals a gradual return to growth momentum.
Policy Implications
The data reflects improving economic fundamentals, particularly in high-growth service industries and infrastructure-linked industrial sectors. However, the uneven agricultural performance highlights ongoing vulnerabilities, particularly in climate-sensitive crops and fisheries.
Policy makers may need to:
- Support agricultural modernization and risk management,
- Expand export competitiveness in IT/BPO and financial services,
- Sustain investment in construction and infrastructure, and
- Ensure inflationary pressures do not undermine consumer-driven sectors.
Outlook
With the economy on track for steady growth, sustaining momentum will depend on fiscal stability, investment inflows, and productivity-driven reforms. The 4.9% Q2 expansion provides a cautious optimism, though structural challenges remain in balancing growth across all sectors.
