By: Staff Writer
May 18, Colombo (LNW): Business optimism in Sri Lanka has taken a step back, as reported in the May edition of LMD, a leading business magazine. According to the latest LMD-PepperCube Business Confidence Index (BCI), there’s a noticeable decline in corporate sentiment, reflecting increasing caution among business leaders.
The magazine reveals that businesspeople have scaled down expectations for economic recovery compared to the previous month. The BCI, based on a survey conducted in early April, dropped from 73% in March to 66% in April – a 7% decline in the number of participants who believe the economy will improve over the next 12 months.
At the same time, 25% of respondents now expect the economy to remain unchanged, up from 19% previously, while the percentage of those predicting a downturn has risen slightly to 10%.
Sales expectations have also dipped for the second consecutive month. Only 78% of executives now anticipate improved sales volumes in the year ahead – a six-point decline from March. This downward trend began in February, ending a brief period of growing optimism seen earlier.
“This reflects a broader sense of caution across the corporate landscape,” said an LMD spokesperson, emphasizing that the momentum gained in prior months appears to be fading.
Despite the setback in sentiment, LMD notes that Sri Lanka’s business confidence levels, although declining, remain above the historical average. The BCI fell from 128 points in the fourth quarter of 2024 to 123 points in the first quarter of 2025. For context, the long-term average since 2014 stands at 82.93 points, with highs of 136 in 2014 and lows of 20 in 2020 during the height of the COVID-19 crisis.
While business confidence has weakened, other economic indicators offer a more nuanced picture. Export earnings grew by 5.3% in the first quarter of 2025, driven by strong performances in textiles, spices, and tea. Additionally, the Central Bank of Sri Lanka has maintained an accommodative monetary policy to help ease inflation and promote recovery.
Nevertheless, challenges remain. Fiscal consolidation efforts and the need to sustain export momentum are pressing concerns, especially as the country continues to manage its trade deficit and debt obligations.
The latest issue of LMD, including this analysis, has been released in print and distributed digitally via WhatsApp and social media, offering deeper insights into Sri Lanka’s evolving economic landscape.
