Sri Lanka’s export sector has demonstrated strong growth in the first quarter of 2025, with a near 6% increase compared to the same period in the previous year. The country’s total exports reached USD 4,212.13 million, showing resilience despite broader economic challenges. March alone saw a notable rise in both merchandise and services exports, marking significant year-on-year and month-on-month growth. However, despite this positive performance, the World Bank has highlighted ongoing poverty concerns, projecting a more moderate economic growth outlook for 2025.
Solid Export Growth in Q1 2025
Sri Lanka’s export sector continues to show resilience, with exports for the first quarter of 2025 increasing by 5.87% year-on-year, totaling USD 4,212.13 million. The growth, which is a testament to the country’s recovery efforts, marks a substantial rebound compared to the same period in 2024. The growth is largely attributed to both merchandise and services, signaling a diversified export portfolio.
March 2025 was particularly strong, with exports reaching USD 1,507.90 million, reflecting a 6.24% year-on-year growth from March 2024. Additionally, the month saw an impressive 11.76% increase from February 2025, further underscoring the momentum in Sri Lanka’s trade sector.
Merchandise Exports Show Strength
The merchandise export sector has proven its resilience, posting a 5.87% year-on-year increase in March 2025, reaching USD 1,215.90 million. This growth has been bolstered by key exports such as gems, jewelry, and petroleum products. Provisional data from Sri Lanka Customs points to continued strength across various product categories.
For the first quarter of 2025, overall merchandise exports are estimated to have reached USD 3,325.09 million, reflecting a 4.61% increase compared to Q1 2024. This performance highlights the sector’s ongoing recovery despite global economic uncertainty.
Services Exports Surge
In a standout performance, Sri Lanka's services exports have seen robust growth, with an estimated 7.79% increase in March 2025, totaling USD 291.12 million. This is a significant improvement over the same period in 2024, driven primarily by strong performances in sectors like tourism and IT services.
For the entire first quarter, services exports rose by an impressive 10.88%, reaching USD 887.04 million, highlighting the growing importance of Sri Lanka’s knowledge-based economy. These services have become a critical pillar in the country’s export sector, diversifying income sources and fostering sustainable growth.
Economic Growth: A Mixed Outlook
While Sri Lanka’s export sector has posted strong figures, the broader economic outlook remains mixed. The World Bank released its biannual Sri Lanka Development Update, noting that a significant portion of the population—nearly one-third—is still living in poverty or at risk of falling into poverty. This underlines the ongoing socio-economic challenges despite the country’s impressive economic recovery in 2024.
The World Bank report highlights that Sri Lanka's economy surpassed expectations in 2024, recording a 5% growth—higher than the projected 4.4%. This growth was driven primarily by strong performances in industry and services, particularly in construction and tourism. However, the outlook for 2025 is more tempered, with growth expected to moderate to 3.5%, primarily due to lingering effects from the crisis, structural barriers to growth, and global trade uncertainties.
Conclusion: Export Growth Amid Economic Challenges
Sri Lanka’s export sector is showing strong signs of recovery, with a near 6% increase in the first quarter of 2025. Both merchandise and services exports have contributed to this growth, with services in particular standing out as a bright spot. However, despite these positive trends in trade, the country faces ongoing socio-economic challenges, as highlighted by the World Bank. With global headwinds and domestic structural issues still in play, Sri Lanka’s economic growth in 2025 is expected to moderate, requiring sustained efforts to ensure inclusive growth and long-term stability.
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