Consumer confidence has been on a roller coaster ride for the past couple of years; and with the economy stabilising, consumers are once again feeling optimistic – albeit cautiously.

“Consumers are reeling because of the cost of living resulting from price increases in the last few years,” the Chairman of Cargills Bank Asoka Pieris explained.

He noted that today’s prices are almost double those of 2021 and despite inflation decreasing in recent months, customers are still feeling the impact of past increases, as well as hikes in utility charges and VAT.

“Consumers are also impacted on the income side because of the increases in income taxes,” he said, nevertheless acknowledging that these “were required to balance the government’s budget.”

Pieris noted: “Consumers in Sri Lanka are fully aware that there are no magic solutions to this problem. So there is cautious optimism that there will be an adjustment in the taxes and the government will find other ways to raise revenue.”

The growth of some sectors such as tourism and exports are also indicators that the positive trend of the nation’s economic expansion will continue.

Additionally, the banking sector has recovered to a great extent, having overcome many challenges over the last four years with the main issue being non-performing loans.

“Businesses could not operate and as a result, they couldn’t repay their loans,” Pieris explained, adding that the situation is pivoting today and banks are also helping companies to recover.

“Even the Central Bank of Sri Lanka has set up a business revival unit to help businesses recover,” he noted, adding that “there is close collaboration between banks and businesses; and therefore, we see that the risk of non-performing loans is much lower now than it was two years ago.”

He noted: “One of the other concerns that banks had was regarding the debt restructuring but hopefully, that’s also behind us. So banks are anticipating that businesses will grow and supporting them.”

Like all other sectors, banks were also affected by the brain drain. Yet, Pieris looks at this with optimism.

“New employees and those who have been at the bottom have had an opportunity to rise faster due to the brain drain,” he elaborated, noting that “in some cases, those who may have retired also continued,” which contributed to solving the problem of skill gaps.

With many sectors improving, Pieris sees many opportunities for businesses to capitalise on.

He explained this by citing an example: “There is a lot more opportunity in the tourism industry. For instance, the Nine Arch Bridge is a hotspot today and bucket list item for foreigners but it’s been sitting there for more than a hundred years without being noticed by anybody.”

“There are lots of hidden gems that people and businesses need to uncover – and when this happens, banks can support them,” he assured.

While service exports have grown, he believes that these too have much more potential stemming from the rise of remote work: “You can sit in Sri Lanka, enjoy the country’s relatively low cost of living and earn in dollars.”

Apart from financing solutions, banks also play a pivotal role in offering business advice – especially to new business owners.

And Pieris pointed out that “anybody who starts a business needs to know that there are ups and downs, and they need to save for a rainy day.”

“They also need to understand the dynamics of business cycles. For instance, you might enter at the start of a business cycle and think everything is going well only to lose track or face an eventual slowdown. Entrepreneurs need to be educated on all these things, and the importance of investing and saving,” he emphasised.

He asserted that “the country has to generate income, which is a priority,” pointing out that the private sector will lead this endeavour – and the banks must gear up to support and encourage businesses if they are to be a part of this success.