Sri Lanka’s digital economy is gaining strong momentum, with e-commerce projected to reach $3.9 billion and e-services expected to expand to $1.9 billion by 2029, according to the Institute of Policy Studies (IPS) Annual State of the Economy 2025 report.
The IPS estimates the country’s overall digital economy to be worth Rs. 1,342 billion, making up 4.5% of Sri Lanka’s GDP. The report highlights how digital businesses and online platforms are driving innovation, creating new products, and making transactions faster and more affordable—all while supporting long-term growth and competitiveness.
Information and communication services have become a vital part of the services sector, steadily contributing to country’s digital economy over recent years. The IPS notes that the global shift toward digitalisation, especially during the COVID-19 pandemic, has accelerated this growth and boosted demand for digital solutions.
Between 2015 and 2020, Sri Lanka’s ICT-BPO industry expanded rapidly, with the number of firms tripling and the workforce doubling. The sector earned around $850 million in 2020, and the workforce grew 51% in just five years, reaching over 124,000 employees by 2018.
By 2025, projections suggest that the ICT, BPO, and BPM workforce could grow to 300,000, generating about $2 billion in export revenue. The IPS also expects the industry to foster over 1,000 tech startups, strengthening Sri Lanka’s position as a dynamic digital economy.
Based on Central Bank data, information and communication activities account for Rs. 606.7 billion (2.03% of GDP), while e-commerce is valued at Rs. 735.2 billion (2.47% of GDP)—making it a major driver of digital engagement in Sri Lanka.
The IPS explains that this e-commerce figure is based on total card transactions, doubled to include cash-based purchases that still make up a significant share of online sales.
In 2024, Sri Lankans made Rs. 367.8 billion worth of online transactions using debit and credit cards. The total e-commerce value was estimated at Rs. 735.2 billion and is expected to grow by 10.8% annually, reaching $3.9 billion by 2029.
Online shopping has quickly become part of everyday life, with 52% of internet users now making online purchases at least once a month. Digital advertising has a clear impact too—58% of users say they’ve bought something online after seeing a digital ad.
The most popular online purchases are clothing (43%), followed by personal care and beauty products (23%), and electronics and accessories (22%).
The IPS attributes this rise in e-commerce to better internet access, improved digital payment systems, and higher digital literacy, all of which are helping businesses establish strong online presences through e-commerce sites, social media, and digital marketplaces.
Beyond shopping, Sri Lankans are also embracing digital platforms for everyday services. The IPS identifies e-services—covering areas like food delivery, education, transport, healthcare, and government services—as another rapidly expanding area.
The e-services market is expected to grow by 15.7% annually, reaching $1.9 billion and 6.4 million users by 2029. By 2025, 23% of Sri Lankans are expected to be using e-services, driven by greater smartphone use and improved connectivity.
The IPS stresses that continued growth in e-commerce and e-services will be key to improving service delivery, increasing efficiency, and promoting inclusive digital development.
“The expansion of these sectors will help reduce friction in economic transactions and play a central role in Sri Lanka’s journey toward digital inclusion, economic modernisation, and the growth of its digital economy,” the report emphasizes.
