Sri Lanka’s business confidence reaching its highest level in six months
The Morning: Sri Lanka’s economic outlook is showing signs of resilience, with business confidence reaching its highest level in six months, according to the latest LMD-PepperCube Business Confidence Index (BCI).
In March, 73% of surveyed executives expressed optimism about the economy improving over the next year, a sharp nine-point jump from February. Only 8% anticipate a downturn, signaling renewed faith in recovery
“A significant portion of companies are maintaining a growth-oriented approach, reinforcing the perceived resilience of the economy,” noted PepperCube Consultants in the report. This optimism is further reflected in sales projections, with 84% of business leaders expecting higher sales volumes in the coming year, though slightly tempered from February’s peak.
However, the investment climate tells a different story. Confidence in Sri Lanka’s investment prospects has plummeted to October 2023 crisis levels, with only 5% rating conditions as ‘very good’, a dramatic drop from 27% in January. Meanwhile, hiring intentions remain steady, with 46% of firms planning to expand their workforce, while 48% will maintain current staffing levels.
The mixed signals, rising sales optimism amid lingering investment hesitancy, highlight both recovery potential and unresolved challenges. As LMD’s data reveals, Sri Lanka’s business landscape is navigating a delicate balance between cautious optimism and structural concerns.
OSL take:
Sri Lanka’s business confidence recording the highest point in since the past six months indicates the resilience, strength and growth of the country’s overall economy, especially after facing an unprecedented economic crisis in 2022. The quick turnaround recorded by Sri Lanka in economic recovery serves to boost the confidence of foreign businesses/investors on the growth and business potential of the country. Sri Lanka’s strategic positioning in the Indian Ocean, the many trade agreements as well as trade concessions enjoyed by the country with many foreign countries and the target of becoming a hub in the South Asian region have all helped to boost Sri Lanka as an emerging business destination in the region. The overall economic expansion shown by the country and the resultant expansion of business/investment opportunities in all key economic sectors present a host of lucrative business ventures for foreign businesses/investors. Sri Lanka could also serve as a hub in the region for foreign businesses/investors to set up bases to engage with other countries using preferential treatment enjoyed by Sri Lanka with them. Businesses could also look at local and international expansion of operations through the formation of partnerships or joint ventures with local businesses.
| Article Code : | VBS/AT/20250424/Z_2 |