Sri Lanka’s economic recovery maintained momentum in March 2026, with both the manufacturing and services Purchasing Managers’ Indices registering expansion, central bank data released Friday showed.
Services surge to 59.4
The services PMI compiled by the Central Bank jumped to 59.4 in March from 54.4 the previous month. Financial services remained the primary driver, benefiting from increased lending activity. Wholesale and retail trade expanded on the back of Avurudu festive demand, and professional services also recorded growth.
Employment increased as firms expanded their workforce to meet rising consumer demand ahead of the festival season.
Manufacturing also expands
The manufacturing PMI separately expanded in March, driven by seasonal demand. However, respondents reported a tight production environment, citing raw material and fuel shortages alongside rising costs linked to the Middle East energy crisis.
Headwinds persist
Some firms highlighted downside risks including the impact of the Middle East conflict and broader global economic uncertainty. The IMF’s latest World Economic Outlook flagged these same risks in its adverse scenarios for emerging markets.
Both indices expanding signals broad-based recovery in Q1 2026, consistent with the ADB’s moderate growth forecast for the year. The data will feed into CBSL’s upcoming policy rate decision and the IMF’s 5th/6th review conclusions.
