BUSINESS SENTIMENT
CONFIDENCE RISES AMID UNDERCURRENTS
The barometer rises although a plethora of uncertainties lurk in the background
From climate concerns to more high profile arrests and a busy bribery commission, Sri Lanka has seen no shortage of headline grabbing developments over the past month. And drug related arrests continue apace, although shootings show little sign of abating.
The anticorruption drive also featured in Sri Lanka’s latest scrutiny at the UN Human Rights Council (UNHRC). While acknowledging action on corruption and alleged postwar crimes, the Office of the UN High Commissioner for Human Rights (OHCHR) stressed that more must be done to address the country’s long legacy of impunity.
Alongside demands for accountability, calls for tax relief have gained attention with the Secretary to the President Dr. Nandika Kumanayake recommending measures to ease the PAYE tax burden on working people.
However, balancing relief measures with revenue needs remains a challenge, although vehicle imports continue to bolster state coffers: Sri Lanka Customs recently reported that 316,000 vehicles imported in the first half of the year generated more than Rs. 512 billion in taxes.
There was encouraging news on the external front too. Official foreign reserve assets rose by 4.6 percent to US$ 6.9 billion in August, from 6.6 billion dollars in July. Meanwhile, the Central Bank of Sri Lanka absorbed US$ 579 million from the domestic foreign exchange market during the month.
These gains offer some reassurance as global pressures threaten to drive import costs through the roof – the price of a barrel of Brent crude oil has spiralled upwards in recent weeks, towards a dizzy height of US$ 110 at the time of going to press, amid fears of prolonged supply disruptions because of tensions in the Middle East.
And rising global food prices could add fresh pressure on household budgets. According to the FAO, in August world food prices have reached their highest level since late 2022.
And weather related hardships are already being felt in Sri Lanka: the Disaster Management Centre (DMC) reported that the effects of El Niño have affected 154,167 people across eight districts, compounding the hardships facing vulnerable communities.
THE INDEX Against this mixed backdrop, the LMD-PEPPERCUBE Business Confidence Index (BCI) rose by 13 points to register 162 in September, from 149 in the preceding month.
The barometer stands 36 points above its historic median of 126 but remains two points below the 12 month average of 164 and well short of the September 2025 reading of 195.
According to PepperCube Consultants, sustaining this improvement will depend on stability in the broader economic environment and how effectively prevailing business concerns are addressed.
PROJECTIONS September’s somewhat surprising outcome offers a degree of encouragement but the outlook for the remaining months of this year remains uncertain with developments at home and abroad likely to shape corporate sentiment.
It is likely therefore, that caution will remain firmly embedded in the corporate mindset – unless Budget 2027 offers the relief that the nation yearns for.
– LMD
