Sri Lanka Economy & Market Update: January 2026 📈

• Fiscal Outlook: The 2026 budget deficit is projected to rise by 1.4% to 6.5% of GDP, primarily due to recovery spending following Cyclone Ditwah. Capital expenditure is set to increase to 5.0% of GDP to facilitate infrastructure repairs exceeding US$ 330 Mn. • Export Performance: Cumulative earnings reached US$ 15.78 Bn (Jan–Nov 2025), a 5.8% YoY growth. • Apparel & Textiles: Earned US$ 4.83 Bn (+4.9% YoY), remaining the largest industrial contributor. • Tea: Earnings rose 7.44% YoY to US$ 1.39 Bn, despite a slight dip in November. • Coconut Products: Saw a massive 44.13% surge in export revenue. • Monetary & Inflation: Headline inflation (CCPI) remained stable at 2.1% in December, well below the 5% target. The Central Bank has maintained the policy interest rate at 7.75% to support private sector credit growth and steady recovery. • Market & Tourism: The Colombo Stock Exchange saw the ASPI gain 3.23% in 2025. Tourism targets for 2026 are set at 3 million arrivals to further bridge the trade deficit, which stood at US$ 6.9 Bn for late 2025.