Sri Lanka’s corporate sector is regaining momentum in 2025, buoyed by a strong resurgence in exports and a thriving technology industry. Key data from the Export Development Board (EDB) highlights a 7.14% year-on-year rise in total exports during the first five months of 2025, reaching US$ 6.93 billion—a notable improvement from the US$ 6.47 billion recorded in the same period last year.

This growth is driven by both merchandise and service exports, with the latter contributing significantly to the upward trend. Merchandise exports saw a 5.46% increase, totaling US$ 5.34 billion, while service exports surged by 13.2% to US$ 1.59 billion between January and May.

Sectors such as spices, food and beverages, electrical components, and coconut-based products have played a major role in this export performance. Notably, export-oriented companies producing coconut kernel and fibre products—such as coconut oil, milk powder, cream, coco peat, and fibre pith—posted strong gains. The apparel sector also showed signs of a robust recovery, with exports to the European Union (excluding the UK) growing by an impressive 27.04%.

Among the standout performers in the corporate space are Teejay Lanka PLC and Hayleys PLC. Teejay, a major textile exporter, is poised to benefit from expanded trade agreements and improved export facilitation, while Hayleys continues to maintain a strong presence across sectors like activated carbon, textiles, and rubber. Ex-Pack Corrugated Cartons PLC, which supports packaging for export goods, and Kelani Tyres PLC, a rubber-based manufacturer, also recorded improved performance amid rising global demand.

Adding to this optimistic outlook is renewed investor confidence, particularly among Japanese companies operating in Sri Lanka. A majority of these firms expect profit growth in 2025, reflecting an improved economic environment and growing business confidence.

Meanwhile, the technology sector continues to thrive, not only in performance but also in workplace satisfaction. According to a recent study by Great Place to Work, the top 10 companies in Sri Lanka’s tech industry reported an average 91% positive employee perception. These companies include Adapt Information Technologies, Altrium Ltd., BoardPAC, Dijital Team, EGUARDIAN Lanka, Huawei Technologies Lanka, ITX360, Stelacom, SYNERGEN Health, and SYNERGEN Technology Labs.

The EDB expects the manufacturing sector, particularly textiles and garments, to lead the industrial recovery, supported by a rise in new orders. Overall, the corporate outlook for 2025 remains positive, as exports and tech continue to be key drivers of economic resurgence.

Sri Lanka’s consumer inflation in Colombo is beginning to show signs of resurgence after a long period of stability, raising new questions about the sustainability of monetary policy as food prices rise. While overall inflation remains subdued on a year-on-year basis, short-term price pressures—particularly from the food sector—have begun to mount, complicating the Central Bank’s policy outlook.

According to the Department of Census and Statistics, the Colombo Consumer Price Index (CCPI) rose by 0.9 percent in June 2025, following a 0.8 percent increase in May. This recent uptick is largely driven by rising food prices, with the food sub-index increasing by 1.8 percent in June to reach 249.3 points, after a sharper 2.7 percent rise the previous month.

Although prices have been on the rise in the short term, consumer inflation over the past 12 months actually recorded a deflationary trend of -0.6 percent. This paradox highlights the uneven nature of Sri Lanka’s post-crisis recovery. Over the past 33 months since monetary stability was restored around September 2022, consumer prices in Colombo have only risen by 3.6 percent—an unusually low figure given the volatility experienced during the economic crisis that preceded this period.

The food sub-index has increased by just 0.9 percent since September 2022, signaling that while price pressures are currently intensifying, they remain moderate compared to historical norms. Nonetheless, the sharp climb in vegetable prices and other staples in recent weeks has stoked fresh concerns among consumers and policymakers alike.

The Central Bank of Sri Lanka (CBSL) is currently targeting an inflation range of 5 to 7 percent, though actual inflation has remained below this level for several months. Despite high levels of excess liquidity in the money market, inflation has remained in check due to disciplined monetary and exchange rate policies. The rupee has remained stable, and interest rates have gradually declined as the government reduced domestic borrowings.

Economists note that the CBSL’s success in preserving capital and preventing currency depreciation has been a key factor in maintaining price stability. However, recent monetary easing—particularly the most recent policy rate cut—has raised caution. While it was not directly inflationary, given weak private credit demand and the mid-corridor signaling, some analysts warn that further loosening may carry risks if not aligned with underlying economic fundamentals.

Historically, Sri Lanka maintained inflation on par with the United States up until 1978. However, subsequent changes to the central bank’s operating framework led to recurrent inflation spikes. Since the deflationary turn in 2022, these “anchor conflicts” have been largely muted, and stability restored.

Nevertheless, with inflation creeping up and food prices leading the charge, the CBSL may soon face a delicate balancing act—sustaining growth without igniting inflation.

German-affiliated companies in Sri Lanka are expressing renewed confidence in the country’s economic trajectory, despite facing turbulent global economic conditions, according to the Spring 2025 AHK Business Barometer released by the Delegation of German Industry and Commerce in Sri Lanka (AHK Sri Lanka).

The survey, based on feedback from 54 German-linked businesses operating in Sri Lanka, revealed that over half (54%) described their current business situation as “good,” with none reporting a negative assessment. A strong 66% anticipate improved business conditions over the next 12 months, while 32% expect stability—leaving only one respondent forecasting a downturn.

These findings were presented by AHK Sri Lanka Chief Delegate Martin Klose at a high-profile Breakfast Dialogue event in Colombo. Klose noted that German companies in Sri Lanka are demonstrating “cautious optimism,” especially in contrast to the prevailing sentiment back home in Germany, where firms are grappling with stagnant growth, weak demand, and escalating labour costs.

Klose emphasized the contrasting outlooks, stating that while German firms in Europe face shrinking GDP forecasts and declining investment appetite, their counterparts in Sri Lanka are showing readiness to expand. According to the survey, 33% of German businesses in Sri Lanka plan to increase local investment, and 48% aim to maintain current levels. Furthermore, 31% intend to expand their workforce, and 63% expect to retain their current staffing—indicating a relatively stable employment outlook.

However, companies also identified a number of structural challenges. Chief among them is the shortage of skilled labour, highlighted by 47% of respondents. Other concerns include weak local demand (26%), tight financing conditions (25%), and rising labour costs. These issues are common across many emerging markets and are being closely monitored by German businesses in Sri Lanka.

Geopolitical concerns also loom large. A significant 71% of the companies surveyed believe evolving U.S. trade policies will negatively impact their operations in Sri Lanka, although the expected severity varies among firms. Long-term strategic challenges such as global economic fragmentation, climate change, supply chain restructuring, and the energy transition were also identified as critical factors for future business planning.

The survey also shed light on the business composition: nearly 50% operate in the trade sector, with the rest engaged in manufacturing, construction, and services. About 70% are subsidiaries or branches of German firms, and 39% represent companies employing over 1,000 people globally.

The event concluded with a panel discussion featuring B. Braun Lanka’s Managing Director Dr. Nathalie de Dieuleveult and Allianz Insurance Lanka CEO Prashant Grover, who shared insights on adapting to global challenges, workforce strategies, and aligning with sustainability goals.

Sri Lanka’s apparel sector continues to demonstrate resilience despite global uncertainties, including looming tariff threats from the United States and ongoing demand volatility in key Western markets. As the country’s largest industrial export sector and a major employment provider, the apparel industry has remained a pillar of economic stability through turbulent times—supported by market diversification and a pivot towards value-added products.

In May 2025, Sri Lanka’s apparel exports remained broadly stable, recording only a marginal decline of 0.63% compared to the same month in 2024. Total export earnings reached US$ 365.08 million. While this figure suggests a temporary softening, the overall export performance for the first five months of the year tells a story of steady recovery and adaptability.

The May downturn was primarily due to reduced demand in two key markets— the United States and the United Kingdom. Shipments to the US fell by 7.59%, while exports to the UK declined by 6.81%. These contractions underscore the persistent uncertainties in Western consumer markets, which continue to be affected by high inflation, shifting consumption patterns, and geopolitical concerns, including trade policy fluctuations such as the potential re-imposition of tariffs by a future Trump administration.

However, this dip was largely offset by strong performances in other regions. Exports to the European Union rose by 5.15%, while shipments to non-traditional markets surged by an impressive 11.1%. This diversification strategy appears to be yielding results, with exporters successfully penetrating alternative markets amid sluggish Western demand.

From January to May 2025, total apparel export earnings climbed by 9.8% to US$ 2.02 billion, reflecting the sector’s broader recovery momentum. The EU (excluding the UK) recorded the highest growth at 15.36%, followed by a 13.12% increase in non-traditional markets. Even the US and UK markets showed year-to-date growth of 6.52% and 3.74%, respectively—suggesting that despite monthly fluctuations, overall demand remains stable over the longer term.

Commenting on the sector’s performance, a spokesperson for the Joint Apparel Association Forum (JAAF) said, “The industry’s year-to-date performance demonstrates resilience and adaptability, driven by strategic market shifts and continued investment in value-added products. We are encouraged by the momentum, particularly in emerging and EU markets.”

To sustain this recovery trajectory, JAAF emphasized the critical need for a stable and predictable trade policy environment. Industry stakeholders continue to advocate for policies that ensure long-term competitiveness and help exporters navigate global headwinds. As the global landscape evolves, Sri Lanka’s apparel sector is proving its capacity to adapt, innovate, and survive.

The Consumer Affairs Authority (CAA) has announced it will initiate legal action against traders selling salt packets that do not display the importer’s or manufacturer’s details and the retail price.

In a statement issued yesterday, the CAA revealed that certain importers and manufacturers have released salt products into the market without proper labeling, in violation of consumer protection regulations. The Authority warned that selling or distributing such unregulated goods is illegal and urged all traders and consumers to refrain from engaging with such products.

The CAA also advised traders to retain formal invoices containing accurate details of the importer or manufacturer and the corresponding pricing. It cautioned that the possession of salt stocks without valid documentation would also result in legal consequences.

Additionally, the Authority dismissed recent media reports suggesting that a maximum retail price (MRP) for salt had been agreed upon during discussions with the Salt Manufacturers Association. It clarified that no such agreement was reached and labeled the reports as false.

The CAA reiterated its commitment to ensuring fair trading practices and protecting consumer rights through strict enforcement of regulations.

The Government of Japan has committed US$ 2.5 million to support a three-year project aimed at strengthening anti-corruption mechanisms and promoting transparency and accountability in Sri Lanka’s public governance.

The initiative, to be implemented in partnership with the United Nations Development Programme (UNDP), focuses on establishing a robust anti-corruption framework to combat corrupt practices in both public and private sectors. The agreement was formally signed yesterday (July 1) at the Embassy of Japan in Colombo by Japanese Ambassador Akio Isomata and UNDP Resident Representative Azusa Kubota.

The project’s key objectives include enhancing the integrity of governance and business practices, improving the efficiency of government operations, and boosting investor confidence by curbing institutional corruption. It will also work to strengthen the capacity of anti-corruption institutions, improve investigation and prosecution processes, enhance stakeholder coordination, and empower citizens—especially youth and journalists—to play an active role in promoting accountability.

Importantly, the project will include components to engage young journalists and children in anti-corruption advocacy, aiming to build a culture of integrity from an early age and ensure sustained civic engagement.

Several high-ranking officials attended the signing ceremony, including Attorney General and President’s Counsel Parinda Ranasinghe, Secretary to the President Nandika Sanath Kumanayake, Secretary to the Ministry of Justice and National Integration Ayesha Jinasena, Commissioners of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), and representatives from the Embassy of Japan and UNDP.

This strategic partnership marks a significant step in Sri Lanka’s long-term efforts to foster good governance and social accountability through international cooperation.

Former Controller General of Immigration and Emigration Harsha Ilukpitiya yesterday (July 1) pleaded guilty before the Supreme Court to charges of Contempt of Court for failing to comply with a Supreme Court order related to the controversial outsourcing of visa services.

Ilukpitiya, who has been in remand custody for the past nine months, admitted guilt when the case was taken up before a three-judge bench comprising Justices Yasantha Kodagoda, Janak de Silva, and Arjuna Obeyesekere. The Court scheduled further proceedings for July 24 to determine the appropriate sentence.

The charges stem from Ilukpitiya’s failure to implement a Supreme Court order that suspended a Cabinet decision permitting the outsourcing of online and expatriate visa processing in Sri Lanka. His noncompliance triggered contempt proceedings under Section 9(7) of the Contempt of Court, Tribunal, or Institution Act No. 08 of 2024.

On September 25, 2024, the Supreme Court ordered Ilukpitiya to be remanded for the duration of the proceedings, citing a serious disregard for the authority of the judiciary.

Several spells of showers will occur in the Western, Sabaragamuwa and North-western provinces and in Nuwara-Eliya, Kandy, Galle and Matara districts.

A few showers may occur in Jaffna and Mannar districts.

Fairly strong winds of about (30-40) kmph can be expected at times over Western slopes of the central hills and in Northern, North-central and North-western provinces and in Trincomalee and Hambantota districts.