Sri Lanka Economic Monthly - September 2025 - The Lion in Spring

Includes reviewed Views and Updates

This is Frontier’s monthly flagship report covering in detail Sri Lanka’s macroeconomic situation and our key forecasts. The September edition contains the output for our intensive review of the Sri Lankan economy and our views for the 2025-2026 period.

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 September story focuses on the continuous overperformance of Sri Lanka’s macroeconomic fundamentals and how they combine in reaching the countries’ fiscal and external targets set for 2025 and 2026. We are now of the clear view that what we are seeing is not a cyclical recovery but a structural shift in the economy and our forecasts and views on the economy are shifting to reflect this.

The Focus goes into details of our Fiscal and Balance of Payments outlook for 2025 and 2026, which supports our view of structural change. The continuing current account surplus is a big part of our story.

All this distils into our updated 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.