News & market updates

Sri Lanka's rubber sector faces mounting cost, demand, disease and labour pressures, with 2025 rubber export earnings down to about USD 945m from ~USD 1.01bn in 2024. Removal of SVAT, a 15% wage rise, disease outbreaks and higher energy costs have suppressed prices, cut replanting and threaten long-term viability without policy support.

Sri Lanka's external current account recorded a $369.7m surplus in January 2026, up 271% YoY, driven by 9.1% export growth, strong remittances and a narrower trade deficit. Gross official reserves were $6.8bn, foreign inflows into gov't securities were $16.6m while CSE saw a $21.9m net outflow; the LKR was 0.2% stronger YTD to end-February.

The Central Bank of Sri Lanka will issue a review report tomorrow assessing the potential impact of the ongoing Middle East crisis on Sri Lanka’s economy, the president told Parliament; the evaluation aims to clarify possible effects on the country’s financial sector.

Hayleys PLC’s proposed unsecured senior redeemable debentures of up to LKR7 billion were assigned a 'AAA(lka)' National Long-Term Rating by Fitch. Fitch noted subsidiary debt to consolidated EBITDA rose to 2.9x in 3QFY26, expects it to moderate to ~2.5x by FY27 and said failure could lower the debentures one notch.

Fitch says Middle Eastern sovereign ratings can likely withstand a short (under one month) regional conflict but prolonged damage to energy infrastructure or extended hostilities could pressure sovereign ratings. Fitch assumes the Strait of Hormuz would be effectively closed during the conflict, weighing on oil and gas exports (notably for Bahrain, Kuwait, Qatar and Iraq) and disrupting tourism and air travel.

Colombo Stock Exchange plunged at Tuesday open and trading was halted after the S&P SL20 fell 5.53% (to 6,269) and the ASPI dropped 5.27% (to 22,483.76). The halt ran from 09:31–09:36 with an auction until 10:01; brokers blamed Middle East tensions and possible supply-route disruptions.

CFA Society Sri Lanka and Frontier Research will run a half-day "Economics in Practice" executive programme on 12 March 2026 in Colombo to help professionals interpret economic indicators and fiscal/external trends (trade balances, capital flows, reserves) for business and investment decisions.

Seylan Bank PLC fully disbursed LKR 1.2 billion across 90 loans under the government-funded 'Atha Hitha' MSME programme in 2025 and has been allocated LKR 1 billion for the first tranche of 2026. Loans are available up to LKR 25 million at a concessionary 5% p.a., with tenors up to 10 years and an 80% credit guarantee for eligible women-led businesses.

Dilmah Genesis and LSE South Asia Centre convened experts in Colombo who concluded Sri Lanka's recovery needs enterprise support that prioritises relational advice, trust and quality upgrading alongside finance to sustain entrepreneurial resilience. A White Paper with policy suggestions will be prepared for government and published online.

The Sri Lanka Export Development Board held a Regional Exporters Networking Forum in Matara on 24 Feb 2026 with nearly 250 exporters from Galle, Matara, Hambantota and Monaragala to identify challenges and explore new export opportunities. Minister Sunil Handunnetti and senior officials attended; the forum aims to reduce regional export disparities and boost export performance.

High Commissioner M. Rizvi Hassen said Sri Lanka will work to restore and deepen engagement with the Maldives, citing Bank of Ceylon’s 44-year presence and a goal to return to pre-2019 levels of 20,000–30,000 Maldivian visitors/residents. He highlighted opportunities across tourism, financial services, construction, agriculture and healthcare.

U.S. and Israeli strikes on Iran sent oil sharply higher (WTI ~+8% to $72.70, Brent ~+9% to ~$79.19), dragging global equities lower and lifting gold and the dollar; bond yields fell while higher-than-expected wholesale inflation may complicate Fed rate-cut timing.

Fitch assigned a 'AAA(lka)' National Long-Term Rating to Hayleys PLC's proposed unsecured senior redeemable debentures of up to LKR7 billion. Fitch noted subsidiary debt-to-consolidated-EBITDA rose to 2.9x in 3QFY26 (limit 2.5x) but expects it to moderate toward 2.5x in FY27, otherwise ratings risk.

MTI Consulting CEO Hilmy Cader warned the Gulf war escalation could stress-test Sri Lanka’s economy by disrupting about 140 scheduled weekly Gulf flights and Gulf airspace. He said this would reduce hotel bookings, disrupt cargo and time-sensitive exports, and affect nearly 1 million Gulf-based workers and roughly US$1.5bn of exports to the Middle East.

A US-Israel strike on Iran and ensuing Strait of Hormuz disruption sent Brent crude up over 7% (above US$90) and led the Ceylon Petroleum Corporation to raise diesel prices (Auto +Rs4, Super +Rs6), threatening Sri Lanka's fuel supplies, tea exports and imports of construction materials.

Digital Economy Ministry Secretary Waruna Sri Dhanapala said Sri Lanka is in the final stage of enabling inward remittances via PayPal with collaboration from private banks and the Central Bank. Once live, SMEs and freelancers can receive foreign income through a regulated channel, supporting FX inflows and tax compliance.

Sri Lanka apparel exports fell 2.66% YoY in January to $425.44m; US shipments fell 2.73% to $165.11m, EU ex-UK down 1.93% to $126.99m, UK up 0.23% to $61.71m, and other markets down 6.07% to $71.63m. JAAF said the revised DCTS and a uniform temporary 10% US tariff from 1 Jan 2026 should help sourcing flexibility and short-term pricing.

Russel’s Wellness showcased Ayurveda-inspired wellness teas and medicinal formulations at Gulfood 2026, drawing strong interest from global buyers and a visit from Trade, Commerce, Food Security and Cooperative Development Wasantha Samarasinghe, highlighting export potential for Sri Lanka’s heritage wellness sector.

Sri Lanka's apparel exports fell 2.66% YoY to US$425.44m in Jan 2026 (Jan 2025: US$437.07m); US shipments fell 2.73% to US$165.11m and EU ex-UK fell 1.93% to US$126.99m, while the UK was stable at US$61.71m. Revised DCTS (from 1 Jan 2026) and a uniform 10% temporary US tariff should improve sourcing flexibility and short-term pricing certainty.

The US Supreme Court ruling rescinded IEEPA tariffs, reducing Sri Lanka's effective US tariff from about 31% to 21.6% and granting tariff-free access to an additional USD 65.1m of exports. Section 122, Section 232 and MFN tariffs still apply and potential rises (e.g. Section 122 to 15%) mean ongoing tariff uncertainty for apparel and other exports.

Portugal's Foreign Minister Paulo Rangel called for a 'new era' of structured economic partnership with Sri Lanka, highlighting cooperation in renewable energy (solar and wind), tourism, infrastructure/public works and digital development. Both countries agreed to reactivate their Joint Cultural Commission, and Portugal said it will advocate constructive engagement on Sri Lanka's GSP+ review in 2027.

The Government declared regulations allowing exporters to invest repatriated export proceeds into local US dollar-denominated government bonds, widening access beyond commercial banks and aiming to boost demand and deepen the local dollar bond market.

A Montana State-linked US delegation led by Mooney Group expressed strong interest to invest in and develop Sri Lanka's graphite industry, offering technology transfer, safety/environmental standards and links to US and global markets.

Kumudika Fernando, Chairperson of the Maliban Group, was honored at the CEO of the Year Awards 2025 for leading Maliban’s operational growth and international expansion, including a landmark partnership with Reliance Consumer Products that opened broad access to the Indian market.

HNB CEO Damith Pallewatte was named Sri Lanka’s ‘Bank CEO of the Year 2025’. HNB reported group PAT of Rs.49.8 billion, bank PAT of Rs.45.4 billion, assets of Rs.2.39 trillion and gross loans over Rs.1.5 trillion for the year ended 31 Dec 2025.

CEMS‑Global's 15th Textile Series will be held 5–7 March 2026 in Colombo to connect global suppliers and support Sri Lanka’s apparel export drive, aligning with government targets to raise total exports to $36bn by 2030 and apparel to over $8bn; apparel earned about $5.3bn last year.

The U.S. Supreme Court invalidated the use of IEEPA for broad tariffs, cutting the effective tariff rate sharply, and the administration moved to a temporary replacement (announced at 10% then 15% under Section 122). The ruling creates trade and fiscal uncertainty, including an estimated USD240bn revenue impact and potential USD175bn in refund risk.

A Montana State Partnership Program delegation, including Mooney Group LLC, met Sri Lanka’s Ambassador Mahinda Samarasinghe to explore investment opportunities in the country’s graphite sector. Sri Lanka said it will facilitate FDI supporting value-added production and collaboration on technology, safety and environmental standards.

US Embassy Chargé d’Affaires Jayne Howell told an AmCham forum that deeper US engagement with Sri Lanka will depend on reciprocal trade, two-way FDI and predictable, transparent rules to attract American capital. She highlighted Port of Colombo expansion to 15m containers by 2027 and SelectUSA pathways for Sri Lankan firms to invest in the US.

Sri Lanka's tea exports in Jan 2026 rose 7% YoY to 20.71m kg, average FOB climbed 5.6% to Rs. 1,821.71/kg and export earnings were about $121.7m (up 8% YoY). Iraq remained the top importer (2.95m kg) while Türkiye surged 118% to 2.36m kg, with gains across all product categories.