Sri Lanka’s rise to 79th in the global ease of doing business rankings for 2026 signals a recovery in business confidence following a period of economic turbulence. The improved ranking reflects a more stable regulatory environment, supported by easing inflation and declining borrowing costs that have enhanced access to capital for businesses.
Yet, a closer examination reveals that this progress may be masking deeper structural issues that continue to hinder sustainable economic development.
The latest Global Soft Power Index, compiled by Brand Finance, places Sri Lanka at 100th globally, marking a drop from its 97th position in 2025. With a score of 33.8 out of 100, the country’s declining soft power underscores persistent weaknesses in governance and institutional effectiveness.
Soft power plays a crucial role in shaping international perceptions, influencing decisions by investors, corporations, and global institutions. While Sri Lanka has improved its image as a tourist destination ranking higher for its food, friendliness, and overall appeal these gains have not been sufficient to offset declining confidence in governance.
This divergence presents a key challenge for policymakers. While economic stabilisation has improved perceptions of doing business, global views on governance have deteriorated, indicating a disconnect between economic reforms and institutional progress.
For entrepreneurs and investors, this creates uncertainty. Although lower borrowing costs and improved financial conditions make it easier to start and expand businesses, concerns over regulatory consistency and transparency remain significant barriers.
Adding to these challenges is Sri Lanka’s declining global media influence, which fell from 104th to 129th. Reduced international visibility can weaken the country’s ability to promote itself as an investment destination, particularly in an increasingly competitive global market.
Regionally, Sri Lanka’s position also raises concerns. It ranks just below Nepal in soft power, while countries facing greater instability, such as Afghanistan, remain significantly lower. Meanwhile, the United States continues to dominate global influence rankings, highlighting the wide gap Sri Lanka must bridge.
Despite these challenges, Sri Lanka’s strengths should not be overlooked. Its resilience in tourism and people-to-people engagement offers a foundation for rebuilding global trust. Leveraging these strengths, alongside targeted reforms in governance and institutional transparency, could help the country convert its improved ease of doing business ranking into sustained economic growth.
In conclusion, while Sri Lanka’s improved ranking reflects positive momentum, the path forward requires addressing deeper structural issues. Without meaningful governance reforms, the country risks undermining the very progress that has boosted business confidence in the short term.
