Sri Lanka Economic Monthly - October 2025 - Steady on the Turn

This is Frontier’s monthly flagship report covering in detail Sri Lanka’s macroeconomic situation and our key forecasts. The October edition focuses on Sri Lanka’s macroeconomic story so far and what it could mean for the 2026 budget in November.

The report is structured to provide an Executive Summary section with key takeaways from the report and a summary of our views on the exchange rate and interest rates. Going into the detailed section provides our overall economic story for Sri Lanka taking into account the latest data and developments. The October story focuses on the continuous overperformance of Sri Lanka’s macroeconomic fundamentals and touches on the manufacturing story that is starting to build up in Sri Lanka. While we highlight this structural shift, we see potential for the country to grow on the basic of strong fundamentals and even factors such as inflation to remain structurally low.

Key Macro Forecast Table

The Focus for this month dives into income and consumer growth that we are starting to see post recovery. It touches on how various consumer brackets are behaving along with an outlook for the overall Sri Lankan consumer.

All this distils into our exchange rate and interest rate views for 2025 and 2026, which are available as scenarios and best guess narrow ranges on an end-year and quarterly basis. For those wondering about how to make use of all this information in the context of global uncertainty, we provide an updated risk and opportunities map, alongside the key action points we think are relevant to specific client types.

For those interested in the key data points on Sri Lanka’s macroeconomic developments, the final section provides the latest on the trade balance, current account balance, reserves, exchange rate, interest rates, and inflation – including our forecast on CCPI inflation up to mid-2026.

Our clients would have received the report to their emails and is accessible on our Athena reports platform since 30th September. If you still haven’t had a chance to read through click here! If not, please get in touch with us for a trial subscription to our reports (clientconnect@frontiergroup.info).

Disclaimer: Information collected/analyzed is from sources believed to be reliable or from the Central Bank/Government. Frontier Research Private Limited however does not warrant its completeness or accuracy. Opinions and estimates given constitute our judgment as of the date of the material and are subject to change without notice. The reports and presentations given are not intended as an offer or solicitation for the purchase or sale of any financial instrument. The reader must make their own independent decision regarding any securities or financial instruments mentioned herein. Securities or financial instruments mentioned may not be suitable to all investors. This communication including any attachments contained herein is governed and bound by the “Confidentiality and Disclaimer” detailed and available for your specific reference at our corporate website.