Dec 15 (Reuters) - Sri Lanka's economy grew 5.4% year-on-year in the third quarter of 2025, official data showed on Monday, signaling a sustained recovery from the decade's worst financial crisis in 2022.
The island nation's economy had grown 4.9% in the preceding quarter.
Sri Lanka's agriculture sector grew by 3.6% in the third quarter from a year earlier, while industrial output expanded by 8.1%, and services grew by 3.5%, the census and statistics department said in a statement.
The island nation, which was emerging from the worst economic crisis in decades that peaked in 2022, is reeling from a severe cyclone that hit in late November.
Cyclone Ditwah left 643 people dead and at its peak affected nearly 10% of the 22 million population. Floods caused by torrential rain damaged crucial infrastructure and the island's agriculture sector, authorities said.
Growth is projected at 4.5% this year by the central bank but analysts say growth could slow to about 3% in 2026 due to Ditwah.
"We are expecting a 0.5%-0.7% contraction in the economy due to the cyclone. The impact will be tempered as reconstruction spending, which could be about $2 billion, will also drive growth next year," said Shehan Cooray, head of research at HNB Stockbrokers.
Sri Lanka, which is already under a four-year, $2.9 billion program from the International Monetary Fund, has sought $200 million in emergency funds from the global lender. The IMF expects the Sri Lankan economy to grow 3.1% in 2026.
An IMF team will visit in January for a fresh assessment before releasing the sixth tranche of the original program.
The World Bank is making up to $120 million in emergency support available by repurposing funds from ongoing projects.
"This will support recovery and help restore essential services and infrastructure--including health care, water, education, agriculture, and connectivity--in the areas hit hardest by the cyclone," it said in a statement.
(Reporting by Hritam Mukherjee in BengaluruEditing by Bernadette Baum and Ros Russell)
By Uditha Jayasinghe
