Sri Lanka’s economic growth is projected to slow to 3.5% in 2025 and further decline to 3.1% in 2026 and 2027, according to the World Bank’s latest Global Economic Prospects report.
The forecast reflects the lingering effects of the country’s recent economic crisis, persistent structural challenges, and heightened global uncertainties.
The broader South Asian region is also expected to experience a slowdown, with overall growth decelerating to 5.8% in 2025 due to rising trade barriers, weakened exports, and investment uncertainty.
India’s growth is projected at 6.3% for 2025/26 — a downgrade of 0.4 percentage points from earlier forecasts — but is expected to rebound to 6.6% annually over 2026–27, driven by strong services exports.
In contrast, Bangladesh is expected to see moderate growth at 4.9% in 2025/26 and 5.7% in 2026/27, supported by political stability and reform efforts.
Pakistan’s growth is forecast to rise to 3.1% in 2025/26 and 3.4% the following year, helped by easing inflation and falling borrowing costs.
Smaller economies such as Bhutan and Nepal are projected to benefit from hydropower expansion, while the Maldives is expected to grow 5.7% in 2025 before moderating slightly.
Afghanistan’s growth is expected to remain subdued at 2.2%, impacted by reduced donor aid.
The World Bank warns that risks to the region include intensifying global trade tensions, inflation-driven financial tightening, capital outflows, and the threat of social unrest or climate-related disasters.
