Sri Lanka’s Sources of Foreign Exchange in 2025
Source: Central Bank of Sri Lanka
Sri Lanka’s external sector recorded a current account surplus of $1.5 billion in the first half of 2025, up 30% from a year earlier. According to the Central Bank, much of these gains came from merchandise exports, worker remittances, and tourism, which together account for over 85% of the country’s foreign inflows. Exports are slowing, remittances are rising through migration, and tourism is growing in numbers but not in spending. The dollars are flowing again, but the base of this recovery remains narrow.
Merchandise Exports: Still the Top Earner, but Slowing
Sri Lanka’s Merchandise Exports Value 2025
Source: Export Development Board (EDB)
Merchandise exports remain Sri Lanka’s largest source of foreign exchange, though earnings have weakened in 2025. The export base is narrow and concentrated in a few traditional sectors. Slowing global demand and new trade barriers have reduced growth across most major categories.
- Apparel and Textiles: Still the top export, but orders have fallen amid weaker western demand and regional competition.
- Tea: Modest growth in value-added products, though high costs and labour shortage limit margins.
- Coconut-Based Products: The strongest performer, lifted by global demand for sustainable materials.
- Rubber-Based Products: Declining due to tariffs and softer industrial demand.
- Spices and Essential Oils: Early gains lost as prices fell and re-exports increased.
The overall trend points to a broad slowdown, with agricultural exports showing more resilience than industry. Sri Lanka’s export base remains reliant on traditional goods and needs to shift towards higher-value, diversified production.
Worker Remittances: Record Gains, Driven by Brain Drain
Worker Remittances Inflows by Country (Q2-2025)
Source: Central Bank of Sri Lanka
Worker remittances are Sri Lanka’s second-largest source of foreign exchange, rising sharply in 2025. By September, inflows reached $5.81 billion, up 20% year-on-year, and the Central Bank expects them to exceed $7 billion by year-end. The rise reflects both formal banking use and continued migration, which has expanded the base of remitters. Over 200,000 Sri Lankans left for overseas jobs by August, mostly to the Middle East, which accounts for 80% of placements. Yet this strength hides a deeper imbalance: the growth comes not through opportunity at home, but through workers leaving in search of it.
Tourism: Arrivals Up, Spending Down
Top ten source markets to Sri Lanka, January to September 2025
Source: Sri Lanka Tourism Development Authority
Tourism remains a key source of foreign exchange, but recovery in 2025 is uneven. Arrivals are up, yet earnings lag. By August, the sector had earned $2.29 billion, up 6% year-on-year, with 1.72 million visitors in the first 09 months. India now accounts for 1 in 3 tourists, with Europe the second-largest source. Average daily spending has fallen from $181 in 2024 to $172 in 2025, and in August arrivals rose 20% while revenue fell 8%, underscoring the need to shift from volume to value.
The Outlook: Stability Built on Fragile Ground
Sri Lanka is earning more foreign exchange in 2025, but from the same limited sources. Exports, remittances, and tourism continue to anchor the recovery, each revealing a different strain: slower trade, migration-driven inflows, and lower visitor spending. Smaller earnings from transport and IT services add support but little scale. The pattern across all sectors is clear: recovery is real, yet built on a narrow base sustained by external demand and the labour of Sri Lankans abroad.