COLOMBO – Sri Lanka’s digital economy has reached an estimated value of Rs. 1,342 billion, or 4.5% of GDP, according to the Institute of Policy Studies (IPS) State of the Economy 2025 report. The study highlights the rapid growth of e-commerce and e-services, which are reshaping consumer behavior, business operations, and national economic competitiveness.
The report attributes this digital momentum to innovation driven by online platforms, lower transaction costs, and increased access to information technology. The information and communication (ICT) sector remains a key contributor, bolstered by the global acceleration toward digitalization during and after the COVID-19 pandemic.
E-Commerce Expansion
E-commerce continues to lead Sri Lanka’s digital transformation, contributing Rs. 735.2 billion (2.47% of GDP) in 2025. Total card-based e-commerce transactions were Rs. 367.8 billion in 2024, and IPS estimates the overall value to double when accounting for cash-based transactions.
The sector is forecast to grow by 10.8% annually, reaching $3.9 billion by 2029. Around 52% of internet users now make online purchases at least once a month, with digital advertising emerging as a major influence — 58% of users reported buying products after seeing digital ads. The most popular online purchases include clothing (43%), personal care and beauty products (23%), and electronics and accessories (22%).
E-Services on the Rise
The IPS report identifies e-services — including food delivery, online education, healthcare, transport, and government transactions — as another fast-growing component of the digital economy. The sector is expected to expand at an annual rate of 15.7%, reaching a market volume of $1.9 billion and 6.4 million users by 2029, with user penetration projected at 23% by 2025.
ICT-BPM Sector Growth
Sri Lanka’s ICT-BPO sector has also shown robust expansion, with the number of firms tripling and the workforce doubling between 2015 and 2020. The industry generated $850 million in revenue in 2020 and is projected to reach $2 billion in export earnings by 2025, supported by a workforce expected to grow to 300,000 employees.
The report notes that this industry will help foster over 1,000 technology startups, reinforcing Sri Lanka’s emergence as a regional digital hub.
Driving Inclusive Growth
IPS concludes that the continued growth of e-commerce and e-services will be central to improving service delivery, enhancing efficiency, and promoting inclusive digital development.
“The expansion of these sectors will be key to reducing friction in economic transactions and supporting broader goals of digital inclusion and economic modernization,” the report stated.
