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.

By: Staff Writer

February 18, Colombo (LNW): Sri Lanka’s apparel sector has a significant opportunity to expand its presence in the United States, not only as a strategic business move but also as a means of strengthening its global competitiveness. The industry, which is a major contributor to Sri Lanka’s economy and a key foreign currency earner, stands to benefit from closer ties with the U.S. market.

This call to action was highlighted by U.S. Ambassador to Sri Lanka, Julie Chung, at the Sri Lanka Apparel Exporters Association Annual General Meeting in Colombo. She emphasized that apparel manufacturers are a crucial pillar of the country’s economic foundation and must navigate both challenges and opportunities in an evolving global landscape.

The ambassador reinforced the United States’ commitment to fostering business ties and investment. She pointed out that the U.S. apparel manufacturing sector is dynamic and continues to expand, with projected revenues of $365 billion by 2025 and employment for 83,000 people. With its advanced technology, skilled workforce, and strong infrastructure, the U.S. provides a lucrative market that can enhance the capabilities of Sri Lankan apparel businesses.

By establishing operations in the U.S., Sri Lankan apparel companies could benefit from reduced shipping times, lower tariffs, and improved market responsiveness. Ambassador Chung noted that the apparel industry is driven by innovation, adaptability, and creativity—qualities essential for success in the global economy. She cited the success story of Nike, which began as a small-scale operation in 1964 and has since grown into a $100 billion company with a global workforce.

Another notable example is Martin Trust, an American entrepreneur who played a pivotal role in transforming Sri Lanka’s apparel sector in the 1980s by introducing advanced U.S. manufacturing techniques.

Trust was instrumental in the growth of MAS Holdings, which has since expanded its operations back into the U.S. with a cutting-edge design and delivery hub in North Carolina.

This facility not only provides high-quality jobs but also supports research and innovation in apparel materials and technology.

The success stories of companies like Nike and MAS Holdings demonstrate that innovation, resilience, and vision are key drivers of global success. Sri Lanka’s apparel industry, from large-scale manufacturers to local entrepreneurs, continues to shape the future of the global market.

As Sri Lanka’s new government formulates its trade and investment strategies, the U.S. remains encouraged by its emphasis on transparency, good governance, and fostering a business-friendly environment.

 Ambassador Chung underscored the importance of maintaining fair competition, honoring contracts, and streamlining regulations to attract foreign investment.

Looking ahead, Sri Lanka’s commitment to quality manufacturing and ethical business practices can help it remain a leader in the global apparel industry. The U.S. reaffirms its partnership in supporting Sri Lanka’s journey toward economic growth and long-term prosperity.

By: Staff Writer

February 18, Colombo (LNW): Sri Lanka is on the verge of a major digital transformation as the government accelerates efforts to modernize the economy.

 Recognizing the potential of digital financial systems, President Anura Kumara Dissanayake has unveiled strategic initiatives to position Sri Lanka as a leading digital economy in South Asia.

The government is committed to strengthening regulatory frameworks, fostering technological innovations, and enhancing financial inclusion to drive economic growth in the coming years.

Sri Lanka is on the verge of a major digital transformation as the government accelerates efforts to modernize the economy.

Recognizing the potential of digital financial systems, President Anura Kumara Dissanayake has unveiled strategic initiatives to position Sri Lanka as a leading digital economy in South Asia.

The government is committed to strengthening regulatory frameworks, fostering technological innovations, and enhancing financial inclusion to drive economic growth in the coming years.

In his 2025 Budget Speech, President Dissanayake announced the establishment of a Digital Economic Authority to oversee and regulate the expanding digital sector.

 Additionally, new legal frameworks will be introduced to facilitate digital payments, ensuring security and efficiency in financial transactions.

The President emphasized the need to move away from a cash-based economy, citing the recently launched ‘GovPay’ platform as a crucial step in this transition. He assured that the shift would be implemented in carefully planned phases with clear communication to the public.

To encourage technological advancements, the government aims to attract investments in emerging sectors such as Artificial Intelligence, Robotics, and Financial Technologies. 

With a goal of expanding Sri Lanka’s digital economy to exceed USD 15 billion or contribute more than 12% of the national GDP, the President proposed an allocation of Rs. 3,000 million for digital development in 2025.

Sri Lanka has already emerged as the fastest adopter of digital payments in South Asia. 

The post-pandemic landscape has witnessed a significant increase in digital transactions, with at least a 20% growth since 2019, particularly among debit card users. 

Global payment leader Visa has recognized Sri Lanka as one of its fastest-growing markets in the region. 

According to Ramakrishnan Gopalan, Visa’s Vice President and Head of Products for India & South Asia, the country has demonstrated strong economic recovery and increasing consumer engagement with digital payment systems.

Visa anticipates sustained double-digit growth in digital payments over the coming years, with greater penetration of card-based transactions. 

The company is preparing to relaunch its Infinite card initiative, targeting high-affluent consumers, who are reportedly adopting digital payment methods at rates nearly three times higher than other demographics.

 Gopalan noted that demand for credit cards is rising among emerging affluent consumers, prompting financial institutions to enhance their offerings.

February 18, Colombo (LNW): The Executive Board of the International Monetary Fund (IMF) is set to convene on February 28, 2025 to review and approve the third assessment of Sri Lanka’s Extended Fund Facility (EFF) programme.

This meeting will be a crucial step in securing further financial support for the country, with the IMF staff having reached a staff-level agreement with Sri Lankan authorities on November 23, 2024. If approved, Sri Lanka will gain access to approximately US$ 333 million in additional funding.

Previously, the IMF had made it clear that the disbursement of the fourth tranche of the EFF programme hinged on the approval of the IMF’s Executive Board, which in turn was dependent on the fulfilment of specific conditions by the Sri Lankan authorities.

Amongst these conditions was the submission of the 2025 Budget, which must align with the parameters set forth under the terms of the EFF.

During a press briefing on 6th February 2025, IMF Spokesperson Julie Kozack commended Sri Lanka for the progress made in its ambitious reform agenda. She highlighted that the economy had grown by 5.5 per cent in the fourth quarter of 2024, demonstrating resilience despite the ongoing challenges.

Additionally, she noted that inflation had remained well within target, and the country’s international reserves had risen to US$ 6.1 billion by the end of 2024, marking a positive shift in Sri Lanka’s economic stability.

In response to queries about Sri Lanka’s 2025 Budget, Kozack reiterated that while the staff-level agreement had been reached in November, the approval of the third review by the IMF’s Executive Board was contingent upon the successful implementation of certain prior actions.

These actions include the submission of a 2025 budget that aligns with the agreed-upon parameters of the programme.

The timing of the IMF’s Executive Board meeting closely follows a significant event in Sri Lankan politics—the presentation of the 79th Budget Speech of Independent Sri Lanka by President Anura Kumara Dissanayake on February 17.

This is Dissanayake’s first full budget since taking office, marking an important milestone in Sri Lanka’s fiscal planning and its ongoing collaboration with the IMF.