š Sri Lanka Business Confidence Eases in 2Q26, Recovery Expected in 3Q
ā¢ Overall Sentiment: The CBSL Business Condition Index eased to 101 in 2Q26 (down from 104 in 1Q26) due to Middle East conflict uncertainties, but remains above the neutral 100 mark. Sentiment is projected to rebound to 107 in 3Q26 as global tensions ease. ā¢ Sector Breakdown: - Services: Remained resilient in 2Q26 and is expected to drive 3Q growth alongside strong sales demand and expansion investments. - Industry: Experienced weaker 2Q sentiment, but projected to lead 3Q YoY demand recovery, sales volumes, and investment plans. - Agriculture: Dragged overall 2Q sentiment, staying near neutral, and is expected to remain below the neutral threshold in 3Q. ā¢ Operations & Costs: - Prices & Capacity: Input and output prices saw a notable YoY increase across all sectors in 2Q. Capacity utilisation and investment sentiment improved YoY. - Labour Constraints: Availability of both skilled and unskilled labour is projected to remain a key constraint in 3Q. - Credit Demand: Demand for bank credit is rising across all sectors to meet operational funding. Credit accessibility is broadly normal, though high market lending rates and balance sheet constraints remain headwinds for some firms.