By: Staff Writer
February 18, Colombo (LNW): Sri Lanka’s manufacturing and services sectors have shown significant growth, reflecting positive momentum in the country’s economic outlook as of January 2025. This upward trend suggests a resilient economy, with both sectors poised for further expansion in the coming months.
The Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) reached 59.0 in January 2025, indicating continued growth in manufacturing activities.
The Central Bank of Sri Lanka attributed this increase to positive contributions across all sub-indices. Notably, the textiles and apparel sector reported strong performance, with improvements in new orders, production, employment, and stock of purchases.
Additionally, the food and beverage manufacturing sector maintained its positive trajectory beyond the December festive season. Meanwhile, the Suppliers’ Delivery Time sub-index rose further in January, reflecting increased activity levels.
The services sector also maintained robust growth, with the Sri Lanka Purchasing Managers’ Index for Services (PMI – Services) recording 58.5 in January 2025. Although this represents a slower pace of expansion, business activities improved across most sectors.
The financial services sector showed strong performance, driven by increased lending activities. Furthermore, accommodation, food, and beverage businesses experienced notable growth, supported by a steady rise in tourist arrivals. Other areas, including education, professional services, and transportation, also saw improvements during January.
New business activities expanded in January, particularly in the financial services, transportation, and accommodation sectors. Employment increased across many companies, while backlogs of work decreased compared to the previous month.
In December 2024, the manufacturing sector had already shown strong growth, with the Manufacturing PMI rising to 57.2 from 53.3 in November.
This increase was driven by a surge in production orders during the festive season, particularly in the food and beverage industry.
However, the textiles and apparel sector faced a temporary decline in new orders due to reduced demand from key export markets during the winter holidays. Looking ahead, there is optimism for continued growth in manufacturing over the next three months, supported by expectations of improving economic conditions.
A key development in January 2025 was Sri Lanka’s agreement with China’s Sinopec to accelerate the construction of a $3.7 billion oil refinery in Hambantota. This major foreign investment aims to reduce the country’s reliance on imported oil and strengthen the manufacturing sector.
The services sector also demonstrated exceptional performance in December 2024, with the Services PMI rising to 71.1 from 60.5 in November.
This growth was fueled by increased business activities, particularly in wholesale and retail trade, which benefited from the festive season and a surge in tourism.
The financial services sector also saw substantial gains due to higher lending activity. Business expectations for the coming months remain positive, driven by favorable macroeconomic conditions.
Tourism, a crucial component of the services sector, recorded a strong start in 2025. The country welcomed 112,415 visitors in the first two weeks of January, marking a 21.11% year-on-year increase. This growth in tourist arrivals is expected to boost foreign exchange inflows and further support Sri Lanka’s economic recovery.
