Sri Lanka's economy shrank in the third quarter as a foreign exchange crisis wrecked its recovery from the coronavirus pandemic, official data showed Thursday.

GDP contracted 1.5 per cent on-year in the three months to September, the department of census and statistics said, ending four consecutive quarters of growth.

The island's tourism-dependent economy was hammered by the pandemic and authorities responded to falling foreign exchange reserves with a broad import ban, triggering shortages including food, fuel and medicines.

The crisis has spread to affect manufacturing and services and the department said:  "Increased input prices of producers due to import restrictions imposed as a solution for declining foreign money reserves also contributed to the slowdown.

"The Sri Lankan economy had grown 12.3 per cent in the second quarter but a third wave of infections that forced a 41-day curfew saw services and industries heavily affected, the department noted.