News & market updates

Putin praised Trump and their Alaska meeting made no mention of 'secondary sanctions,' raising hopes the US will not impose additional tariffs or sanctions on countries (including India) importing Russian oil.

President Anura Kumara Disanayake ordered a one-month suspension of two Mannar wind power projects to study environmental and community impacts. One project is 20 MW under construction and the other 50 MW has had tenders/contracts awarded; construction will not proceed without Central Environmental Authority approval.

Sri Lanka is negotiating tax terms and local market access for a Sinopec-built refinery, which the deputy minister said is in final stages and may be finalised by year-end. The project's capacity has doubled and could exceed Sri Lanka's daily requirement of about 120,000–140,000 barrels, raising BOI access questions.

Most Asian stocks rose after U.S. President Trump extended the U.S.-China tariff truce by 90 days, supporting sentiment; Japan’s Nikkei climbed about 2% to a record. Markets are also pricing in Fed rate-cut expectations and are focused on upcoming U.S. CPI data and an RBA policy meeting.

Sri Lanka posted a central government primary surplus of 859 billion rupees in June, well above the IMF target of 130 billion, driven by strong tax receipts (notably vehicle taxes) and lower capital spending. Analysts warn recent rate cuts, dollar-rupee swaps and higher upcoming revenue targets may complicate reserve collection and fiscal stability.

Parliament amended Sri Lanka's electricity law to keep parts of the system permanently government-owned and reduce planned unbundling to four entities including a single distribution company. Opposition and multilateral lenders warned the changes could endanger future financing, noting the transmission arm has about $75m of revenues but needs several billion in investment and that dollar loans could cost around 11%.

Hemas Group reported Q1 FY25/26 earnings of Rs. 1.2 billion, up 26.1% year‑on‑year, with revenue of Rs. 28.5 billion and operating profit of Rs. 2.1 billion. Growth was driven by stronger topline, improved gross margins and lower finance costs, with healthcare revenue up 20.2% while consumer brands saw a marginal revenue decline.

US President Donald Trump has imposed an additional 25% ad valorem duty on imports from India over its purchases of Russian oil. The immediate impact on Sri Lanka is unclear, though Sri Lankan firms that export to India for re-export could face spillover effects.

India's government strongly rebuked US and EU criticism of its continued imports of Russian oil, calling the targeting unjustified and saying it will take measures to safeguard national and economic security. The statement noted US/EU maintain extensive trade with Russia and referenced US threats of additional tariffs after a 25% tariff already on Indian exports.

Sri Lanka collected Rs129bn in vehicle excise duties in H1 2025, up from Rs29.6bn a year earlier; petroleum excise rose 15.5% to Rs112bn, alcohol excise rose 9.2% to Rs108.2bn, while cigarette excise fell 17.9% to Rs44bn.

Treasury Secretary Harshana Suriyapperuma said Sri Lanka is exploring trade discussions with the US to secure more competitive pricing on key imports such as oil and advanced machinery. The talks aim to reduce tariff and non-tariff barriers and tap regional trade flows to lower costs.

Sri Lanka negotiated a reduction in a US 'Trump tariff' from 44% to 20% and will facilitate more imports and ease business for US firms, Treasury Secretary Harshana Suriyapperuma said. Talks cover possible US oil imports, hi‑tech goods, knowledge transfer and broader trade facilitation while final modalities and a national tariff policy are still being worked out.

The U.S. imposed tariffs ranging from 10%–41% on imports from dozens of countries, pressuring Asian shares and lifting inflation expectations; Fed funds futures now price about a 39% chance of a September rate cut, while oil and gold moved modestly.

Colombo CCPI was -0.3% y/y in July 2025, up from -0.6% in June 2025. Food inflation fell to 1.5% (contributing +0.49ppt) while non-food inflation rose to -1.2% (contributing -0.82ppt); housing, electricity and transport were major downward contributors, with education and health rising.

US President Donald Trump said the US will impose a 25% tariff on goods imported from India from 1 August. The tariffs are expected to hit about $87 billion of Indian exports including garments, pharmaceuticals, gems & jewellery and petrochemicals, and could prompt retaliatory actions affecting energy and other trade.

The U.S. and South Korea struck a trade deal that sets U.S. tariffs on South Korean imports at 15% and includes South Korean commitments to invest $350 billion in U.S. projects and to buy $100 billion of LNG and other energy products.

US President Donald Trump said he concluded a deal with Pakistan to jointly develop its oil reserves and that the US is in the process of choosing the lead oil company, but he provided no further details.

US President Donald Trump announced a 15% tariff on South Korean goods and the suspension of de minimis duty exemptions for parcels under $800. He also said South Korea would commit $350 billion in US investments and buy $100 billion of LNG, citing drug and tariff-evasion concerns.

The US Department of State sanctioned six Indian companies for trading Iranian petroleum and petrochemical products, blocking their US-based property and prohibiting transactions by US persons. Alchemical Solutions faces the largest allegation, accused of importing over $84m of Iranian-origin petrochemicals.

Donald Trump announced a 25% tariff on India effective August 1 and said India will pay an additional penalty related to its energy and military purchases from Russia.

President Trump said India will pay a 25% tariff plus an unspecified penalty from August 1 for buying oil and military hardware from Russia; Sri Lanka is awaiting a revision of its own 30% tariff.

First Capital Holdings PLC held its Mid-Year Outlook Investor Forum on 17 July, extending its LKR/USD target to 300–310 to December 2025 and setting an ASPI target of 18,000–19,000 for 2025. The forum also forecast mild rupee depreciation to 305–315 in H1 2026, ASPI 21,000–22,000 in 2026, and AWPR easing to 7.5–8.5% before edging up next year.

Deputy Minister Anil Jayantha Fernando said Sri Lanka's 5% inflation target can be revised if inappropriate, noting the current three-year inflation agreement runs until 2026. He defended lower-than-target inflation, recounted past currency crises and warned rate cuts or reserve moves could risk depreciation and unrest.

The US and EU agreed a 15% 'all-inclusive' tariff on imports, with the EU committing to buy $750bn of U.S. energy and invest an additional $600bn; Sri Lanka says it is continuing discussions with the US Trade Representative to seek lower tariffs.

First Capital Holdings PLC held its Mid‑Year Outlook Investor Forum on 17 July 2025, forecasting an LKR/USD target of 300–310 to Dec 2025, ASPI 18,000–19,000 for 2025 (21,000–22,000 in 2026) and AWPR down to 7.5%–8.5% after a likely 25bp cut. The virtual forum drew 900+ registrations, was run in Sinhala, Tamil and English, and featured panelists from Hemas and Access Engineering.

Sri Lanka has appointed a marketing consultant and will launch a fresh licensing round to market oil exploration blocks in the Mannar basin. The minister said there are no active exploration licences; India’s Cairn previously found hydrocarbons there but extraction was deemed too expensive.

IMF staff concluded a Colombo visit saying Sri Lanka's reform program is yielding results: real GDP grew 4.8% y/y in 2025Q1, headline inflation was -1.1% in 2025Q2 and gross international reserves stood at $6.0bn at end‑June 2025. The IMF urged sustaining reforms, completing debt restructuring, maintaining prudent monetary policy and cost‑recovery energy pricing ahead of the Fifth Review of the EFF.

IMF mission concluded Sri Lanka's reform program is yielding commendable outcomes: real GDP +4.8% y/y in 2025Q1, headline inflation -1.1% y/y in 2025Q2, and gross international reserves of US$6.0bn at end‑June 2025. The IMF urged stronger 2026 fiscal revenue measures, swift debt‑restructuring completion, prudent monetary policy, exchange‑rate flexibility and cost‑recovery energy pricing amid export‑tariff and trade‑policy risks.

JAT Holdings' subsidiary VOLT Charge and John Keells Group have opened the first commercial EV fast charging station in Northern Province at the Keells Jaffna store, featuring a 30kW dual-gun DC fast charger. The installation is the 20th in the VOLT–Keells partnership across the country.

ADB cut its Asia and Pacific growth forecast to 4.7% for this year (down 0.2 percentage points from April) and to 4.6% next year, and lowered South Asia's forecast to 5.9% from 6.0%, citing escalating US tariffs, trade tensions and other external risks.