Sri Lanka entering investment- constrained recovery phase

HNB Stockbrokers releases economic outlook at HNBIB investment forum Real GDP growth forecast at about 4.5% in 2026; nominal GDP expected to reach around Rs. 35 t Re-entry to international Bond markets seen as contingent on debt-to-GDP falling below 80% Recovery remains consumption-led, with investment still below pre-crisis levels Current account surplus forecast to narrow sharply as vehicle imports ease, debt servicing rises

- BY DEVAN DANIEL

SRI Lanka has emerged from the crisis phase with stronger macroeconomic buffers, but the economy is now confronting a more familiar constraint: how to generate durable growth without reopening old vulnerabilities, according to HNB Stockbrokers Director - Research Shehan Cooray.

Speaking at the HNB Investment Bank (HNBIB) Investment Outlook and Market Strategy 2026 Forum last week, Cooray said the economic impact of Cyclone Ditwah was likely to be contained, largely because the shock is occurring against a far stronger macro backdrop than in the past.

"We are not expecting a major economic impact from the cyclone because, compared to previous natural disasters, Sri Lanka is entering this period with both a primary surplus and a current account surplus," he said.

He noted that the worst-affected regions account for only a modest share of national output and industrial capacity, while official reserves have risen to about $ 6.8 billion, providing additional resilience.

On growth, Cooray said HNB Stockbrokers expects real GDP to expand by about 4.5% in 2026, with nominal GDP rising to around Rs. 35 trillion as output finally moves beyond the 2018 pre-crisis peak.