US tariffs bite into SL growth, says ADB

ADB keeps 2025 growth forecast unchanged at 3.9%, Sees 2026 growth revised down slightly to 3.3% as US tariffs weigh on exports, Inflation average for 2025 cuts to 0.5%, rises to 4.5% in 2026

- 

THE Asian Development Bank (ADB) said yesterday that growth in Sri Lanka will be held back in 2026 by new US tariffs on key exports, even as momentum remains intact this year.

"These developments will likely tamp down the impact on the economy this year from a 20% tariff imposed on Sri Lankan exports to the US, mostly garments and rubber. But the tariffs will be more of a headwind, holding back external sector performance and consumption in 2026 because of possible job losses, both directly and indirectly," the ADB said in its latest report released yesterday titled 'Asian Development Outlook: Growth Slows as New Global Trade Environment Takes Shape'.

It said that US tariffs have soared to historic heights amid continued elevated trade policy uncertainty. Though generally lower than announced on 2 April, the additional tariffs that took effect in August are historically high. From 2.4% in 2024, the average effective US tariff rate has surged to 17.4%, the highest since the Great Depression of the 1930s.