News & market updates

Sri Lanka's cumulative exports for Jan–Mar 2026 reached US$ 4,308.11 million, up 1.59% year-on-year. March exports were US$ 1,467.31 million (down 5.2% YoY but up 9.0% month-on-month), with strength in coconut, processed food, electronics and services while apparel and tea declined.

Fitch warns emerging Asia could face rising food-cost pressure if a prolonged US–Iran war disrupts fertiliser supplies, noting nitrogen urea prices have risen about 50% to roughly USD700/tonne and could cut yields and raise food prices later in 2026. Countries with low stockpiles and import dependence are most exposed.

Asia Siyaka Commodities said March tea exports fell 16% YoY to 19.7 Mnkg, leaving 1Q exports down 4.5% to 60.3 Mnkg. Rupee earnings held at Rs.109 billion due to currency depreciation, but dollar earnings fell 5% to $351m amid higher freight/insurance and Gulf shipping disruptions.

Cabinet approved drafting a Bill to create the Sri Lanka Industrial Transformation and Innovation Authority, consolidating the Industrial Development Board, National Enterprise Development Authority and the Small Enterprise Development Division into one body. The authority is intended to improve policy coherence, reduce overlap and strengthen industrial transformation, innovation and SME support.

Dialog Axiata's corporate arm Dialog Enterprise has partnered with Star Garments to deploy 5G-powered IIoT and smart factory solutions across the garment maker's operations to improve efficiency, automation and real-time decision-making.

The Sri Lanka–Korea Business Council held an awareness session 'Doing Business with South Korea' to highlight export and investment opportunities and outline APTA eligibility and compliance for Sri Lankan exporters. The Korean Ambassador praised Sri Lanka's economic stabilization and urged tariff reform, FTA expansion and RCEP consideration.

DFCC Bank convened a discussion examining how the Middle East conflict could transmit into Sri Lanka’s economy, highlighting energy price, shipping, FX, tourism and remittance channels. The forum emphasised banks’ role in helping clients manage FX exposure, trade finance and liquidity amid rising uncertainty.

The Central Bank's Annual Economic Review 2025 reports real GDP growth of 5% and continued macroeconomic stabilization, with a third consecutive current-account surplus and reserve build-up. Monetary policy remained accommodative supporting low interest rates, credit expansion and improved bank/non-bank profitability, while exchange-rate flexibility and easing capital controls were noted.

Industry leaders at a Sri Lanka-Italy Business Council forum warned geopolitical tensions are testing Sri Lanka’s 2026 recovery, citing a 17.4% drop in tourism to 22 March, ~35% of shipping routes affected and sharp rises in freight, insurance and energy costs that could hit exports and tourism if prolonged.

World Bank says Sri Lanka's planned phase-out of para-tariffs (PAL and CESS) by 2029 will cut average import duties by about nine percentage points, with manufacturing hit hardest—food & beverages could see cuts up to 28 ppts while textiles and mining under 5 ppts. Household consumption is projected to rise ~3.1%, with larger gains for lower-income rural households.

LIIN and WUSC hosted the first GRIT-EDTP investor pitch competition in Jaffna to support women entrepreneurs after training 340 participants; winner Pallueir Ltd received Rs. 600,000 in seed capital.

Sri Lanka's and China's central banks discussed promoting renminbi‑denominated settlements to facilitate trade. CBSL governor also met India's RBI governor to discuss promoting Indian rupee settlements for trade and tourism.

World Bank projects Sri Lanka's growth will moderate to 3.6% in 2026, citing higher energy prices and a transition to more sustainable growth. It flagged risks from persistently high energy costs, flight disruptions hitting tourism, skilled-labour shortages, weak public capex execution and climate shocks.

Secondary bond market ended the week steady to marginally lower with notable yield compression in the 2029–2034 tenors. T-bill weighted average yields rose (91d 8.15%, 182d 8.22%, 364d 8.52%) amid an undersubscribed auction; foreign holdings saw a Rs.2m net inflow and USD/LKR closed at 316.55/316.70.

British Cosmetics (Private) Limited has entered a strategic partnership with Ethera Business LLC to advise and support its disciplined expansion into international markets; the first market-specific distribution partner will be announced in due course.

Dhammika Fernando was re-elected chairman of the Free Trade Zone Manufacturers Association for 2026/2027 and urged policy reforms, faster approvals and improved ease of doing business to support exporters and sustain investment and employment.

Sri Lanka–Benelux Business Council hosted a seminar on quality assurance, safety standards and certification, focusing on Halal certification and the global demand for Halal-certified products to guide exporters and food & beverage manufacturers on ISO and Halal compliance.

DFCC Bank PLC held its first Wyapara Hamuwa for 2026 in Kuliyapitiya, engaging 40 coconut chip suppliers linked to PROJAR Lanka to provide financial literacy, banking fundamentals and entrepreneurship support.

PMI Manufacturing rose to 66.7 and PMI Services to 59.4 in March 2026, indicating expansions driven by seasonal demand and strong financial services activity. Firms reported tight production from raw-material and fuel shortages, longer supplier delivery times and precautionary stocking amid the Middle East conflict.

Sri Lanka's manufacturing PMI rose to 66.7 in March from 56.8 in February, signalling continued expansion driven by seasonal demand. CBSL said all sub‑indices expanded (notably food & beverages and textiles), but firms reported raw material and fuel shortages, rising costs and shipping delays.

IMF/WEO: a Middle East war-driven energy shock is raising inflation and weakening external balances in Asia; the region is projected to grow 4.4% in 2026 and 4.2% in 2027 (from 5% in 2025) under the reference forecast. Higher energy costs hit refiners, utilities, manufacturers and tourism, tightening policy space; adverse/severe scenarios could cut cumulative growth by 1–2 percentage points and lift inflation further.

The Embassy of Sri Lanka in Japan hosted the Japan–Sri Lanka ICT Business Matching Event 2026 in Tokyo, featuring 10 Sri Lankan ICT firms, 50+ Japanese representatives and facilitating over 400 B2B meetings. The event aimed to boost ICT exports (now >USD 1.5bn) and deepen Japan–Sri Lanka digital partnerships.

Inextricable Group appointed Jayantha Peiris as Senior Vice President, Digital and Enterprise Transformation. Peiris, with 30 years at MAS Holdings leading ERP and digital initiatives, will strengthen the consultancy's apparel and manufacturing ERP, data and Industry 4.0 service offerings.

ADB economist Liliya Aleksanyan warned the central bank's depreciation of the rupee from 300 to 315 has amplified the cost of imported oil and added to monetary inflation. The ADB expects inflation could rise to 5.2% in 2026 amid excess liquidity from buy-sell swaps.

The U.S. nearly became a net crude exporter last week as exports rose to about 5.2 million bpd and net imports narrowed to 66,000 bpd, driven by supply disruptions from the Iran war. Analysts warn exports are nearing capacity (~6 million bpd) amid tanker and freight limits.

DFCC Bank PLC held its first 'Wyapara Hamuwa' programme for 2026 in Kuliyapitiya, engaging 40 coconut chips suppliers linked to PROJAR Lanka to provide financial literacy and business-banking support. The session aimed to strengthen cash-flow management and supplier operations.

IMF MD Kristalina Georgieva warned policymakers must balance fiscal sustainability with protecting the most vulnerable as West Asia war shocks push up energy prices and slow global growth, and the IMF anticipates $20–50 billion in near-term demand for financial support.

IEA, IMF and World Bank issued a joint statement saying the war in the Middle East has driven up oil, gas and fertilizer prices, disproportionately hurting energy importers and threatening food security, jobs and tourism. They said they will coordinate assessments and provide policy advice and financial support.

IMF warned the war on Iran raises global recession risk, cutting global growth to 3.1% in 2026 and lifting 2026 inflation to 4.4%, and presented adverse/severe scenarios with growth as low as 2% and inflation above 6% if energy disruptions persist.

The UK’s revised Developing Countries Trading Scheme (DCTS), effective January 2026, gives Sri Lanka’s apparel sector greater competitiveness by easing rules of origin and allowing more flexible sourcing, benefiting SMEs with better pricing, shorter lead times and improved market access.