Sri Lanka’s poverty rate is projected to remain approximately 37% above its pre-crisis level in 2026, despite the country’s return to its 2018 level of real economic output, according to calculations by Lakbima News using the World Bank’s latest poverty estimates.
The World Bank’s October 2026 Poverty and Equity Brief projects a poverty rate of 15.8% for this year, compared with an estimated 16.9% in 2025.
The corresponding rate in 2019 was 11.5%.
That leaves a difference of 4.3 percentage points between the projected 2026 figure and the level recorded before Sri Lanka’s economic crisis.
Measured relative to the 2019 rate, the projected poverty rate is approximately 37.4% higher.
Economic output has recovered faster than household welfare
The World Bank’s October Sri Lanka Development Update estimates that the economy expanded by 4.7% during the first half of 2026.
The institution projects full-year economic growth of 4.4%, followed by 4.2% in 2027.
It also reports that real GDP has returned to its 2018 level following twelve consecutive quarters of economic expansion.
These figures describe the recovery in the country’s total production of goods and services.
The poverty estimates measure a different outcome: the proportion of people whose consumption falls below the specified poverty threshold.
The World Bank’s latest figures indicate that the improvement in economic output has yet to produce a comparable recovery in household welfare.
Poverty has fallen, but the pre-crisis gap remains
The projected reduction from 16.9% in 2025 to 15.8% in 2026 represents an improvement of 1.1 percentage points.
The direction is encouraging for households affected by the crisis. However, the projected 2026 rate remains substantially above the 11.5% recorded in 2019.
The World Bank’s assessment indicates that poverty is expected to remain above its pre-crisis level until 2028.
The figures use the international poverty threshold of US$4.20 per person per day, expressed in 2021 purchasing-power-parity terms.
They should therefore be distinguished from poverty estimates calculated using Sri Lanka’s national official poverty line.
2019 poverty rate: 11.5%
Projected 2026 poverty rate: 15.8%
Difference: 4.3 percentage points
Relative increase: approximately 37.4%
The calculation compares poverty rates under the same international measurement standard. It does not represent a 37.4-percentage-point increase.
Employment and earnings remain part of the problem
The World Bank identifies weak labour market outcomes and household incomes as continuing constraints on Sri Lanka’s recovery.
Economic growth can increase national production without raising the earnings of every worker at the same rate.
The distribution of employment, wages and business income determines how much of that growth reaches individual households.
Inflation has also increased in recent months, according to the World Bank, partly because of higher energy and food prices.
Price increases can reduce the purchasing power of households whose incomes have not increased sufficiently to compensate.
The institution’s assessment identifies continued pressure on household welfare even as macroeconomic indicators have improved.
Government finances have improved
Sri Lanka’s fiscal position has strengthened during the recovery, supported by higher government revenue and primary budget surpluses.
Earlier Lakbima News reporting examined the increase in government revenue during the first half of 2026 and the comparatively slow implementation of capital expenditure.
The World Bank’s latest assessment identifies private investment, employment creation and productivity as important factors in improving household incomes over the coming years.
It has also drawn attention to the role of agriculture and food-related businesses in generating employment and export earnings.
These sectors are particularly relevant outside the Western Province, where the World Bank’s poverty assessment identifies substantially higher poverty rates.
Regional differences remain pronounced
The October Poverty and Equity Brief reports that poverty is between two and three times higher outside the Western Province.
The difference is significant because economic activity and higher-paying employment remain concentrated in and around Colombo.
Growth in sectors with limited employment opportunities outside major urban centres may therefore have a smaller immediate effect on poorer households in other districts.
The World Bank projects that poverty will continue declining, although the latest figures indicate that the recovery in living standards is proceeding more slowly than the recovery in GDP.
Its 2026 poverty projection remains 4.3 percentage points above the 2019 benchmark.
