Business
Global uncertainty rising; Sri Lanka must be prepared: Analyst
Sri Lanka must brace for a more volatile global economic environment and stay firmly committed to ongoing reforms, an independent economic analyst warned, following fresh concerns raised by the International Monetary Fund over a possible global downturn.
The IMF, in its latest World Economic Outlook, has cautioned that escalating conflict in the Middle East, particularly involving Iran, could darken the global outlook and even push growth toward near-recession levels. A prolonged scenario could trigger a sharp spike in energy prices, with far-reaching consequences for import-dependent economies like Sri Lanka.
“The global environment is becoming more uncertain, and Sri Lanka must be prepared. The country has made significant progress since its worst economic crisis, but it remains vulnerable to external shocks, especially through energy markets,” the analyst told The Island Financial Review.
“Sri Lanka, which relies heavily on fuel imports, would face immediate pressure on its trade balance and foreign reserves if global oil and gas prices surge. Such a development could also reverse the recent spell of deflation, reintroducing inflationary pressures at a time when domestic demand remains fragile. Deflation offered some relief at that time, but it also reflected subdued economic activity,” the analyst explained. “If inflation returns due to higher import costs rather than stronger growth, the Central Bank will face a difficult balancing act,” he said.
The potential fallout extends beyond energy. A slowdown in global growth could dampen Sri Lanka’s export performance, particularly in key sectors such as apparel and tea, while also affecting tourism , one of the country’s main sources of foreign exchange.
“Tourism has shown encouraging signs of recovery, but it is highly sensitive to global economic conditions and geopolitical instability,” the analyst noted. “Likewise, export demand could weaken if consumers in major markets tighten spending. If fertiliser supplies are disrupted, it could lead to food vulnerability”.
Referring to fiscal challenges, he said: ” The government is currently pursuing consolidation under an IMF-supported programme, but rising energy costs could increase pressure for subsidies or social spending, potentially complicating budget targets. Remittances, another critical inflow, could come under strain if economic conditions in the Middle East deteriorate, affecting Sri Lankan workers employed in the region.”
Despite these risks, the analyst noted that Sri Lanka is better positioned today than during its 2022 economic crisis. Improved foreign reserves, progress in debt restructuring, expanded revenue streams and cost-reflective utility prices have strengthened the country’s economic footing.
“Preparedness will be critical in the current environment. Sri Lanka must stay the course on reforms, strengthen its financial buffers, and focus on diversification of its economic base to better withstand potential global shocks,” the analyst concluded.
By Sanath Nanayakkare
HNB FINANCE PLC has strengthened its Board with the appointment of four Independent Non-Executive Directors, effective September 8, 2026.
The new directors are Renuke Wijayawardhane, Shanti Gnanapragasam, Nabiha Mohamed and Dr. Thisuri Wanniarachchi, who collectively bring extensive experience in financial regulation, banking, risk management, corporate finance, investment strategy, development finance and public policy.
Wijayawardhane, an Attorney-at-Law and capital market professional, retired in July 2025 as Chief Regulatory Officer of the Colombo Stock Exchange after more than 31 years with the Exchange. His experience covers securities regulation, corporate governance, market infrastructure and compliance.
Gnanapragasam has over four decades of banking experience spanning treasury, risk management, credit and trade finance. She currently serves as an Independent Non-Executive Director of Cargills Bank, Wealth Trust and Vision Fund Lanka.
Mohamed is a corporate finance and investment professional who previously served as Lead Transaction Advisor at the State-Owned Enterprise Restructuring Unit of the Ministry of Finance, where she led five divestiture transactions worth over US$600 million.
Dr. Wanniarachchi brings over a decade of experience in development finance, institutional reform and social protection, including work with the World Bank and the Government of Sri Lanka.
Prime Lands Residencies PLC has completed and officially handed over The Palace Gampaha, described as the largest planned gated residential community in Gampaha, to its homeowners.
The development, which commenced construction in 2021, is located two kilometres from Gampaha town and 100 metres from the Colombo-Kandy main road.
Spread across 13.5 acres, The Palace Gampaha comprises 480 two- and three-bedroom apartments in a ground-plus-three-floor development, with prices starting from Rs. 27.5 million.
The project allocates about 80% of its land to landscaped areas and common facilities, while the remaining 20% is used for apartment development. Facilities include a swimming pool, gymnasium, clubhouse, library, community kitchen, laundry, mini-mart and a daycare centre managed by the Lyceum Group.
The fully gated community also incorporates solar power for common areas, underground electricity cabling and a sewage treatment plant with water recycling facilities.
Prime Residencies said all statutory approvals required for the handover had been secured, including certifications from the Condominium Management Authority and registration of the Condominium Plan and Deed of Declaration.
Prime Group Chairman Premalal Brahmanage said the project reflected the company’s vision of creating large-scale residential communities designed to enhance the quality of life of Sri Lankan families.
The project is the latest addition to Prime Group’s portfolio of more than 70 gated community and apartment developments.
Sri Lanka’s Non-Vessel Operating Common Carrier (NVOCC) sector is losing ground despite the expansion of the industry in several regional markets, Sri Lanka Association of NVOCC Agents (SLANA) Chairperson Swabha Wickramasinghe said.
Wickramasinghe, re-elected for a third consecutive term at SLANA’s ninth Annual General Meeting last week said the continued difficulty in collecting Colombo Terminal Handling Charges (THC) as a separate land-based cost was among the key challenges facing the industry.
She said the practice placed Sri Lanka at a competitive disadvantage as principals consider the overall economics of operating through Colombo.
“When Sri Lanka becomes less commercially attractive compared with other regional destinations, the consequences eventually reach our members,” she said.
Wickramasinghe said a committee had been proposed at a recent meeting with the Minister and Deputy Minister to evaluate the THC issue, urging the authorities to expedite its appointment and review.
She also called for an early solution to the problem of uncleared salt containers at the Port of Colombo, which has resulted in delays in releasing empty containers.
With more than 75 NVOCC lines operating in Sri Lanka, she stressed the sector’s importance to regional trade, particularly links with India and China.
Ports Minister Anura Karunathilaka said Sri Lanka should expand regional business while exploring areas such as bunkering, freight forwarding and e-commerce logistics.
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