📈 Global Tensions & Fuel Hikes Dampen Sri Lankan Business Confidence

The LMD-PEPPERCUBE Business Confidence Index (BCI) dipped by 3 points in March to 168 (from 171 in February), reflecting a systemic shock caused by escalating Middle East tensions and domestic supply pressures. While still above the historical median of 125, the index remains 19 points below its 12-month average. • Macro-Economic Pressures: Brent crude surpassed US$ 100 per barrel for the first time since Nov 2022, triggering two local fuel price hikes in March. A domestic gas shortage, attributed to both global supply chains and local "market mafias," has further pressured operating costs. • Sectoral Impact: • Tourism: Potential airspace closures in the Middle East are estimated to cost US$ 15 million in weekly forex inflows. • Remittances: Inflows from migrant workers remain under threat due to regional instability. • Energy & Logistics: Maritime tensions, including the torpedoing of an Iranian tanker in the Indian Ocean, have tested Sri Lanka’s international obligations and maritime security. • Outlook: Central Bank Governor Dr. Nandalal Weerasinghe maintains that Sri Lanka is now better equipped to absorb oil shocks than during the previous economic crisis. President Anura Kumara Dissanayake assured resilience through April, though corporate sentiment remains cautious pending global stabilization.