📈 CBSL Survey: Resilient Growth Outlook for 1Q 2026

The Central Bank of Sri Lanka’s latest Business Outlook Survey (BOS) indicates a resilient expansion in business activity entering early 2026, driven by favorable macroeconomic conditions despite recent climate disruptions. • Overall Sentiment: The Business Condition Index expanded in 4Q 2025 despite Cyclone Ditwah. Firms project continued growth through 1Q 2026, supported by low interest rates and subdued inflation. • Sector Performance: The recovery is led primarily by the services and industry sectors. While all three major sectors expect higher YoY demand and sales, profitability is expected to strengthen most in services and manufacturing. • Investment & Credit: Capacity utilization and investment strengthened YoY. Firms plan to prioritize capital for capacity expansion. Consequently, demand for bank credit is projected to rise across all sectors for operational needs. • Labor Market: Significant constraints persist as the availability of both skilled and unskilled labor contracted in 4Q 2025. Skilled labor availability is expected to remain below neutral levels across all sectors in 1Q 2026. • Risk Outlook: While data shows a steady recovery, the CBSL notes these findings preceded the recent Middle East conflict, which introduces new risks to energy markets and supply chains. _Note: Based on CBSL Business Outlook Survey data._