Sri Lanka’s Business Confidence Index surges in May
The Morning: Sri Lanka’s business sentiment showed a sharp rebound in May, with the LMD-PepperCube Business Confidence Index (BCI) climbing 24 basis points to reach 196, recovering from April’s dip to 172.
The upswing brings the index close to its March level of 197, though still just below the record-matching 204 seen in February.
The improvement comes amid a complex backdrop of political, economic, and social developments both locally and internationally.
Domestically, the conclusion of the long-delayed local government (LG) elections – held for the first time in seven years – may have offered a sense of political clarity, despite the ruling National People’s Party (NPP) seeing a decline in its vote share compared to the November general election.
The Central Bank’s (CBSL) launch of its Sustainable Finance Roadmap 2.0 also added a note of strategic direction to the economic narrative.
The roadmap, described by CBSL Governor Dr. Nandalal Weerasinghe as pivotal to building a resilient and inclusive financial system, comes at a time when climate-related and social risks are escalating.
Internationally, investor sentiment was buoyed by a temporary de-escalation of trade tensions between the United States and China, as both nations agreed to reduce tariffs by 115% for a 90-day period. This move eased concerns about a global slowdown.
Adding to the economic momentum, the World Bank Group announced a $ 1 billion initiative aimed at accelerating private sector-led growth and supporting job creation in Sri Lanka over the next three years.
OSL take:
Sri Lanka’s economy is on a growth path with the target of becoming a hub in the South Asian region. The resilience of the country’s economy shown through the years amidst external and internal shocks and the quick turnaround from the economic crisis faced in 2022, has resulted in attracting many foreign businesses/investors to explore the expanding business/investment opportunities in Sri Lanka. The country’s strategic positioning in the Indian Ocean, the many trade agreements as well as trade concessions enjoyed with many foreign countries and the incentive programmes offered by the Sri Lankan authorities have all added to Sri Lanka’s attraction as an emerging business destination in the region. Given all the positive factors in favour of Sri Lanka including the increasing interest among foreign businesses/investors to engage with the country, setting up bases in Sri Lanka could help many foreign entities to expand their operations in the region. With Sri Lanka on the path to becoming a regional hub, businesses and investments in Sri Lanka could yield quick returns on investment (RoIs) while also assisting with local and overseas expansions.
| Article Code : | VBS/AT/20250612/Z_1 |