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Sri Lanka Business confidence raises hopes for better times

Business Confidence in Sri Lanka is expected to be 125.00 points by the end of this quarter, according to Trading Economics global macro models and analysts.

It has increased to 35 points in the third quarter of 2022 from 28 points in the second quarter of 2022, Central Bank data confirmed.

In Sri Lanka, the Business Condition Index measures entrepreneurs’ sentiment about current business situation and expectation about business conditions.

It includes Profitability, Skilled Labour Availability, Demand, Sales and Capacity Utilization. A value over 100 means business sentiment has improved and under 100 means business sentiment has worsened. The value 100 indicates neutrality.

A rise one more in the exclusive business barometer raises hope of better times,” said business magazine LMD, in its latest edition.

LMD continued: “The implications of Budget 2023 will occupy the minds of corporates as the new tax rates and policies kick in. But there’s been a sense of optimism in recent times, even as people acknowledge and realize that difficult times lie ahead for everyone, if the national economy is to recover and stabilize.”

“It is a relief to note that once again, the LMD-NielsenIQ Business Confidence Index (BCI) has climbed another nine basis points – from 89 in October to 98 a month later,” it added.

NielsenIQ’s Director – Consumer Insights Therica Miyanadeniya explained that: “as we approach the end of 2022, which was a turbulent year, expectations of better things to come in 2023 are high on the radar.”

LMD noted: “The barometer of business sentiment is now only 11 basis points shy of where it stood a year ago (109) and it is hoped the new year will see this cautious optimism intact. That said, the index is still well below March’s 132, the highest so far this year despite the advent of fuel shortages, power outages and the rupee’s demise.”

A spokesperson for LMD further stated that: “The jury is out on the pros and cons of Budget 2023, and we will know the verdict when next month’s survey gets underway in December – and we report on its results in the January edition of LMD.”

“And there are external risks such as the war in Ukraine and the prospect of a world recession in particular. Internally, the outcome of ongoing debt restructuring talks, coupled with renewed calls for an election by opposition forces, could lead to political instability in the new year,” she added.

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