Sri Lanka digital economy has surged to Rs. 1.3 trillion, accounting for 4.5% of GDP, signaling a technology-driven transformation. Digital businesses and online platforms are reshaping trade, services, and employment, marking a key milestone in the country’s modernization.
Digital economy growth in Sri Lanka drives innovation and economic recovery
Sri Lanka’s digital economy has reached an estimated Rs. 1,342 billion, reflecting a remarkable expansion and signaling the increasing role of technology in national development. According to the Institute of Policy Studies (IPS) in its State of the Economy 2025 report, digitalization now contributes 4.5% of the country’s GDP, underlining its growing impact across trade, services, and employment sectors.
Digital businesses and online platforms are driving innovation, streamlining transactions, and boosting productivity across industries. The report identifies information and communication services as a primary growth engine, contributing Rs. 606.7 billion, or 2.03% of GDP, while the e-commerce sector now accounts for Rs. 735.2 billion, representing 2.47% of the nation’s GDP. These figures illustrate how digital technologies are reshaping business operations and consumer behavior.
The COVID-19 pandemic accelerated Sri Lanka’s transition toward digital solutions, creating heightened demand for online services, remote work, and e-commerce platforms. The ICT-BPO sector, a foundational pillar of the digital economy, has grown exponentially since 2015, with the number of firms tripling and workforce numbers doubling to over 124,000 by 2018. Looking ahead, IPS projects that the sector will employ 300,000 professionals by 2025 and generate $2 billion in export earnings, while supporting more than 1,000 tech startups and strengthening Sri Lanka’s position in the regional digital marketplace.
E-commerce has emerged as a powerful growth driver. In 2024, Sri Lankans conducted Rs. 367.8 billion worth of transactions via debit and credit cards, while total e-commerce spending—including cash transactions—reached Rs. 735.2 billion. The sector is expected to maintain a 10.8% annual growth rate, with the market projected to reach $3.9 billion by 2029. Consumer habits are also evolving rapidly: 52% of internet users now make online purchases at least once per month. Digital advertising is playing a crucial role, with 58% of users reporting purchases influenced by online ads. Popular product categories include clothing (43%), personal care and beauty (23%), and electronics (22%).
Beyond retail, e-services such as online education, food delivery, transportation, healthcare, and government services are transforming everyday life. The e-services market is expected to grow 15.7% annually, reaching $1.9 billion and attracting 6.4 million users by 2029. User penetration is forecasted to reach 23% of the population by 2025, fueled by increased internet access and smartphone adoption. This expansion reflects a significant shift in how Sri Lankans interact with services and the broader economy.
The IPS report emphasizes that digital transformation is central to Sri Lanka’s economic recovery and modernization. The continued evolution of e-commerce and e-services is expected to enhance efficiency, improve service delivery, and foster inclusive growth. Economists, however, caution that sustaining this momentum requires strengthening digital infrastructure, improving cybersecurity, and ensuring consistent policy frameworks. Maintaining these standards will be crucial for the digital economy to remain both inclusive and globally competitive.
As Sri Lanka’s digital economy matures, the potential benefits extend beyond immediate financial gains. Increased adoption of digital solutions can drive productivity, create new employment opportunities, and stimulate entrepreneurship across multiple sectors. Moreover, a robust digital economy can help the country attract foreign investment, modernize public services, and build resilience against economic shocks.
Overall, the surge of Sri Lanka’s digital economy to Rs. 1.3 trillion is a testament to the country’s commitment to technology-driven growth. As e-commerce, ICT, and e-services continue to expand, Sri Lanka is positioned to benefit from enhanced efficiency, innovation, and a competitive edge in the global digital landscape. Policymakers, businesses, and consumers all have a role to play in ensuring this growth trajectory remains sustainable, inclusive, and beneficial to the nation’s long-term prosperity.