Purchasing Managers’ Indices indicate expansions in both Manufacturing and Services activities in January 2026.
Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 56.1 in January 2026. This reflects a month-on-month expansion in manufacturing activities at a slower rate compared to the seasonal peak in December 2025. All the sub-indices remained above the neutral threshold during the month.
The Central Bank released its first Monetary Policy Report for 2026 in keeping with the requirements of the Central Bank of Sri Lanka Act, No. 16 of 2023. The biannual Monetary Policy Report provides forward-looking insights about the economy, particularly inflation and economic growth outlook, and risks to projections. Through this Report, the Central Bank strives to improve its transparency and accountability by communicating the rationale behind its recent monetary policy decisions.
Central Bank of Sri Lanka (Central Bank) has noticed certain instances where residents in Sri Lanka transact within the country in foreign currency, rather than in Sri Lanka Rupees. In this connection, the Central Bank wishes to clarify that according to the provisions of the Central Bank of Sri Lanka Act, No. 16 of 2023 (CBSL Act), all transactions executed between or among residents in Sri Lanka shall be made in Sri Lankan Rupees, unless otherwise authorized by the Central Bank for the purposes of the Foreign Exchange Act, No. 12 of 2017.
The Central Bank of Sri Lanka (CBSL) released its latest Market Operations Report (MOR) on 30 January 2026. The MOR aims to enhance stakeholder understanding of the monetary and foreign exchange operations undertaken by the CBSL in the pursuit of implementation of monetary policy under the Flexible Inflation Targeting (FIT) framework, supported by the flexible exchange rate regime.
The Colombo Consumer Price Index (CCPI, 2021=100) based headline inflation (year-on-year, Y-o-Y) accelerated in January 2026 after remaining at the same level for three consecutive months. Accordingly, headline inflation (Y-o-Y) was recorded at 2.3% in January 2026 compared to 2.1% in December 2025, broadly in line with the Central Bank’s near-term projections.
The current account recorded a marginal surplus in December 2025. Monthly current account surpluses were recorded in most months in 2025. As a result, the current account is estimated to have recorded a surplus of US$ 1.7 billion (provisional) in 2025.
The merchandise trade deficit widened on a year-on-year basis in December 2025. Further, the cumulative trade deficit widened to around US$ 7.9 billion in 2025 compared to 2024, despite export earnings recording a historically high level in 2025.
The Sri Lanka Purchasing Managers’ Index for Construction (PMI – Construction), as reflected by the Total Activity Index, increased to 67.1 in December 2025. A majority of firms reported a notable expansion in construction activities during the reference period, despite initial operational disturbances caused by adverse weather conditions.
At the end of the recent visit to Sri Lanka to assess impact of Cyclone Ditwah by the International Monetary Fund (IMF) staff team led by Mr. Evan Papageorgiou, the IMF issued the following press release on 28 January 2026.
The Monetary Policy Board, at its meeting held yesterday, decided to maintain the Overnight Policy Rate (OPR) at the current level of 7.75%. The Board arrived at this decision after carefully considering evolving developments and the outlook on the domestic front and global uncertainties. The Board is of the view that the current monetary policy stance will support steering inflation towards the target of 5%.
Purchasing Managers’ Indices indicate expansions in both Manufacturing and Services activities in December 2025.
Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 60.9 in December 2025, indicating a continued expansion in manufacturing activities. All sub-indices contributed positively to this increase, mainly supported by seasonal demand, despite adverse weather-related disruptions experienced at the beginning of the month.
