By: Staff Writer
October 29, Colombo (LNW): With an upcoming general election, Sri Lanka faces a critical turning point as voters prepare to elect new members of parliament. Following the recent presidential election, the business sector reflects renewed optimism, spurred by a favorable outlook.
The World Bank has raised its growth projection for Sri Lanka to 4.4% this year, signaling economic stabilization after a prolonged period of uncertainty.
Notably, the LMD-PEPPERCUBE Business Confidence Index (BCI) jumped by 39 points in October to 139, a peak not seen in over three years.
This confidence surge aligns with steady improvements in economic indicators, including inflation stabilization and a current account surplus, according to David Sislen, the World Bank’s Country Director. The IMF’s latest review, culminating in October, underscored positive reforms and lent further confidence to international lenders, with Fitch Ratings acknowledging reduced debt risks.
However, uncertainties remain; the upcoming general election on 14 November will shape the future economic climate and could influence parliamentary power dynamics, affecting the momentum of ongoing reforms.
This climate of optimism suggests that, barring any dramatic shifts in the political landscape, Sri Lanka’s business confidence is poised to remain steady, reflecting the overall positive sentiment of the business community in navigating potential challenges and growth opportunities.
Meanwhile, the business community has had its say on the outcome of the presidential election with optimism reigning supreme LMD high lighted. .
And in a welcome external economic assessment, the World Bank increased its growth forecast for this year to 4.4 percent (and a more modest 3.5% for 2025) – from 2.2 percent previously.
“Sri Lanka’s recent economic stabilisation, marked by four quarters of growth and a current account surplus in 2023, is a significant milestone,” affirmed David Sislen – the World Bank’s Country Director for Maldives, Nepal and Sri Lanka – in a 9 October news release.
THE INDEX In October, the LMD-PEPPERCUBE Business Confidence Index (BCI) surged by a whopping 39 basis points to reach 139 – the highest in as many as 42 months.
To put this spike in perspective, the last time the BCI gained as much ground in a month was back in January 2021, when Sri Lankans breathed a sigh of relief upon receiving news that the COVID-19 vaccine would be available to them.
Moreover, this is the highest point the index has reached in 2024 and marks the third time it registered triple digits this year – the previous instance being three months ago when the official rate of inflation began to fall to manageable levels.
PepperCube Consultants observes that despite the uncertainties faced by corporates in recent months, the election outcome has been positively received.
It adds that optimism about both the economy and business activity has risen significantly, following a period of heightened caution and a ‘wait and see’ mindset leading up to the 21 September election.
