Sri Lanka's GDP expanded 4.2% in the second quarter of 2026, marking a slowdown from the previous quarter's 5.1% growth, as industrial activity accelerated while agriculture contracted sharply and services growth moderated.
Sri Lanka's economy grew 4.2% in the second quarter of 2026, according to estimates from the Department of Census and Statistics. Real GDP at constant 2015 prices reached Rs. 3.03 trillion, up from Rs. 2.91 trillion in the same quarter of 2025. However, the growth rate represents a deceleration from the first quarter's 5.1% expansion, marking the slowest quarterly growth since 2024.
Agriculture emerged as the primary drag on the economy, contracting 2.3% after expanding 1.1% in the first quarter. The sector was hit by significant declines across multiple crops, including paddy cultivation (down 15.1%), freshwater fishing and aquaculture (down 61.0%), marine fishing and aquaculture (down 10.1%), and sugarcane and tobacco cultivation (down 14.7%). Some segments recorded gains, including forestry and logging (up 9.7%) and spice crops (up 7.0%), but these could not offset broader weakness. Agriculture accounted for 8.4% of GDP at current prices.
Industrial activity outperformed expectations, growing 7.3% and sustaining momentum from the first quarter. Construction led this expansion at 13.9%, while mining and quarrying grew 17.4%. Manufacturing expanded 3.2% overall, with gains in wood products (13.9%), non-metallic mineral products (13.1%), and machinery and equipment (12.4%), though refined petroleum products contracted 15.2%. The department attributed industrial strength partly to increased imports of raw materials and machinery, which also boosted government revenue through import-related taxes. Industry comprised 25.9% of GDP.
Services activity, representing 52.7% of GDP, expanded more slowly at 2.7%, down from 3.4% in the first quarter and 4.0% in the prior year's second quarter. Growth was led by IT programming and consultancy services (10.0%), insurance (8.0%), and financial services (7.7%), though accommodation and food services grew only 2.9%. Public administration was the sole services segment to contract, declining 2.4%. The department attributed the slowdown to Middle East tensions affecting tourism performance and reduced activity in accommodation and food services compared to the year-earlier period.