Sri Lanka's economy has proved remarkably resilient to successive shocks, with economic activity expanding 4. 2 per cent in the second quarter of 2026, the International Monetary Fund (IMF) said on Wednesday. The growth marked the 11th consecutive quarter of strong economic expansion, the IMF said in a statement issued at the end of its September 10-23 mission to Sri Lanka. "While headline inflation rose to 8 per cent year-on-year in August due to the global oil price shock, expectations are broadly anchored. Gross official reserves have increased, reaching US$6. 9 billion at end-August 2026. Banks remain well capitalised and profitable," it said. Sri Lanka, however, continues to face downside risks from uncertainty over the duration and intensity of the conflict in West Asia, global trade policy and the impact of El Nino, said the international body.