ADB's preliminary take on impact of new US tariffs on Sri Lanka

THE Asian Development Bank's (ADB) Colombo-based experts yesterday confirmed that Sri Lanka will be impacted by the high 44% reciprocal tariff imposed by the US Government, but a proper assessment will only be known in a few months.

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The ADB revealed its observations on Sri Lanka whilst launching its flagship economic publication, the Asian Development K Outlook (ADO) April 2025. It i forecasts Sri Lanka's recovery to 1 continue at a moderate growth of 3.9% in 2025 and 3.4% in 2026 following the strong rebound in 2024.

However, the growth forecast for 7 Sri Lanka is still below the average x for South Asia, which is set to remain the fastest-growing subregion, with - robust domestic demand boosting growth in several economies this year: Growth in South Asia is expected to rise from 5.8% in 2024 to 6% in 2025 and 6.2% in 2026, according to the ADO April 2025 release.

The ADB said economic recovery in Sri Lanka that began in the second half of 2023 continued across all sectors in 2024. Inflation decelerated significantly in 2024 following major cuts in energy prices. Credit to the private sector picked up and reserves continued to build up, while tourism and remittances inflows remained strong. The ADB expects recovery to continue in 2025 and 2026.

As uncertainties from elections and debt restructuring fade, improved investor confidence will support private investment, although consumer demand will remain sluggish amid expected ris ing inflation.