Sri Lanka Imports Growth 12% YoY Dec 2025: What It Means for Businesses

Sri Lanka's imports surged to 2,155.20 USD million in December 2025, marking a significant increase from November's 1,778 USD million^[1]. This growth reflects both the resilience of our economy and the challenges businesses face as import costs continue to shape inflation and operational expenses across the island. Understanding what's driving these import trends is crucial for anyone running a business here, whether you're a retailer, manufacturer, or service provider.

The Import Growth Story: What the Numbers Tell Us

December 2025 saw imports climb by approximately 21% month-on-month, a substantial jump that warrants closer examination^[1]. Looking at the broader picture, Sri Lanka's merchandise imports during 2025 reached 15.39 billion USD, representing a 12.2% increase compared to 2024^[5]. This growth trajectory shows that our economy is importing more goods than it did in the previous year, which has implications for everything from consumer prices to business profitability.

The primary drivers of this import growth include petroleum products, textile fabrics, foodstuffs, and machinery and transportation equipment^[1]. Vehicle imports alone tell an interesting story—they totalled 286 million USD in September 2025, with cumulative vehicle imports reaching 1,204 million USD in the first nine months of the year^[5]. This surge in vehicle imports reflects the government's decision to remove import restrictions on vehicles, allowing more personal and commercial vehicles to enter the market.

Who We're Importing From

Our main import partners remain consistent: India, China, Iran, and Singapore^[1]. These countries supply the bulk of goods that keep our economy functioning, from raw materials for manufacturing to finished consumer products. The concentration of imports from these nations means that any disruptions in trade relationships or global supply chain issues directly affect what we pay for goods locally.

Import Growth and Inflation: The Connection

You might wonder: if imports are growing, shouldn't prices be rising? The relationship is more nuanced than that. While headline inflation measured by the Colombo Consumer Price Index has remained negative since September 2024, reaching -4.2% in February 2025, this is primarily due to downward adjustments in energy prices, currency appreciation, and subdued household demand rather than import volumes alone^[4].

However, as the economy recovers and domestic demand picks up, inflation is projected to turn positive by mid-2025, though it's expected to remain below the Central Bank's medium-term target^[4]. This means that whilst we're currently experiencing deflation (falling prices), the stage is being set for inflation to return. Businesses should prepare for this shift, as import costs will likely translate into higher consumer prices once demand strengthens.

The Trade Deficit Widening

There's an important caveat to celebrate: whilst imports are growing, our exports aren't keeping pace. The merchandise trade deficit recorded a year-on-year expansion in September 2025, as import expenditure exceeded 2 billion USD, creating a deficit of 910 million USD that month^[5]. For the first nine months of 2025, the merchandise trade deficit reached 5.2 billion USD, compared to 4.2 billion USD in the same period of 2024—a concerning 23.8% increase^[5].

This widening gap between what we import and what we export is a structural challenge that policymakers are grappling with. Whilst strong tourism revenues and remittance flows have supported a current account surplus in recent years, the Central Bank expects the current account to be in deficit in 2025 as reduced exports outweigh the impact of reduced import demand^[4].

What This Means for Your Business

Retail and Consumer Goods

If you operate a retail business, growing imports mean more competition and potentially lower prices—at least for now. However, with inflation expected to return, your suppliers' costs will eventually rise, which may squeeze margins. Now is the time to lock in favourable supplier agreements and build relationships with multiple import partners to hedge against future price increases.

Manufacturing and Production

Manufacturers importing raw materials or machinery benefit from the current import growth, as it signals a functioning supply chain and access to essential inputs. However, the widening trade deficit suggests that local manufacturing isn't keeping pace with import growth. This presents both a risk and an opportunity: companies that can substitute imports with locally-made products may find growing demand.

Logistics and Shipping

Import growth directly benefits logistics providers, shipping companies, and customs brokers. With vehicle imports alone reaching 1,204 million USD in nine months, the transportation sector is experiencing increased activity^[5]. If you're in this space, prepare for sustained demand, but also be aware that any policy changes regarding import restrictions could affect your business volume.

Government Policy and Import Restrictions

It's worth noting that the government removed all remaining import restrictions, primarily on vehicles, following the economic recovery in 2024^[4]. This policy shift is reflected in the surge of vehicle imports we've seen. However, policymakers are balancing the benefits of open trade with concerns about the widening trade deficit. Keep an eye on government announcements regarding potential new restrictions or tariffs, as these could significantly impact your import costs.

Foreign Exchange and Currency Considerations

The Sri Lankan rupee gained a cumulative 19.4% against the US dollar compared to end-2022^[4]. This currency appreciation has made imports cheaper in rupee terms, which is one reason why import volumes have grown. However, if the rupee weakens against the dollar in future months, import prices will rise accordingly. Businesses with significant import exposure should consider hedging strategies to protect against currency fluctuations.

Looking Ahead: What to Expect in 2026

The Central Bank of Sri Lanka expects modest medium-term growth, reflecting the scarring effects of the recent economic crisis, structural impediments, and global economic uncertainties^[4]. Import growth may moderate as the economy stabilises, but the current trajectory suggests that imports will remain elevated. Businesses should prepare for:

• Inflation returning to positive territory, making imports more expensive
• Potential policy adjustments to address the widening trade deficit
• Continued currency volatility affecting import costs
• Growing competition from imported goods as supply chains stabilise

Frequently Asked Questions

Why did Sri Lanka's imports jump so much in December 2025?

December 2025 saw a 21% month-on-month increase in imports, driven by seasonal demand, vehicle imports following the removal of import restrictions, and businesses building inventory ahead of the new year^[1]. The removal of import restrictions on vehicles in 2024 has had a cumulative effect, with vehicle imports reaching 1,204 million USD in the first nine months of 2025^[5].

How will import growth affect my business costs?

In the short term, growing imports may increase competition and keep prices stable or lower. However, as inflation returns (projected for mid-2025 onwards), import costs will rise^[4]. If your business relies on imported materials or products, lock in supplier agreements now and build cash reserves to absorb future price increases.

What's driving the widening trade deficit?

Imports are growing faster than exports. Whilst our exports reached 17.25 billion USD in 2025 with a 5.6% year-on-year growth^[3], imports have grown at a faster rate, creating a deficit of 5.2 billion USD in the first nine months of 2025^[5]. This reflects structural challenges in our export-oriented industries and slower recovery in sectors like manufacturing.

Should I be concerned about future import restrictions?

Whilst the government removed import restrictions in 2024 to support economic recovery, the widening trade deficit may prompt policymakers to reconsider. It's prudent to monitor government announcements and maintain flexibility in your supply chain. However, any new restrictions would likely be targeted (e.g., on luxury goods or specific categories) rather than broad-based.

How does the rupee's strength affect import prices?

The rupee's 19.4% appreciation against the US dollar since end-2022 has made imports cheaper in rupee terms, contributing to import growth^[4]. If the rupee weakens, import prices will rise. Businesses importing goods should monitor exchange rates and consider forward contracts to lock in favourable rates.

What opportunities does import growth create for local businesses?

Growing imports indicate a functioning economy with active trade. This creates opportunities for logistics providers, retailers, and businesses that can compete with imports through quality or local advantages. Additionally, businesses that can substitute imports with locally-made products may find growing domestic demand as consumers increasingly support local alternatives.

Conclusion: Preparing Your Business for 2026

Sri Lanka's import growth of 12% year-on-year in 2025, with December reaching 2,155.20 USD million, reflects an economy in recovery mode^[1]. Whilst this growth brings opportunities—more goods available, competitive pricing, and stronger supply chains—it also brings challenges, particularly the widening trade deficit and the return of inflation.

As a business owner or manager, your next steps should be clear: assess your import exposure and diversify your supplier base; lock in favourable supplier agreements before inflation fully returns; monitor government policy on trade and tariffs; and consider hedging strategies for currency risk. The import landscape is shifting, and staying informed positions you to thrive rather than merely survive.

Keep an eye on Central Bank announcements, government trade policy updates, and global economic developments. The recovery is real, but it's not without risks. By understanding what's driving import growth and preparing accordingly, you'll be better positioned to navigate the opportunities and challenges ahead.

Sources & References

1. Sri Lanka Imports - Trading Economics — tradingeconomics.com
2. Sri Lanka Import and Export Statistics 2025 — Procurement Tactics — procurementtactics.com
3. Sri Lanka's Export Performance Exceeded US$ 17.2 Billion in 2025 — Sri Lanka Business — srilankabusiness.com
4. Sri Lanka Development Update 2025 — World Bank — worldbank.org
5. External Sector Performance - September 2025 — Central Bank of Sri Lanka — cbsl.gov.lk