Colombo, 18 September 2026 – Sri Lanka’s economic landscape continues to present a blend of growth and challenges, according to the latest Weekly Economic Indicators released by the Central Bank of Sri Lanka (CBSL) for the week ending 18 September 2026. The report highlights a moderated pace of economic expansion in the second quarter of 2026, alongside fluctuations in global commodity prices and shifts in the monetary and fiscal sectors.
Real Sector: Growth Moderates, Industrial Activity Expands
The Sri Lankan economy recorded a 4.2 per cent growth in the second quarter of 2026, a moderation from the 5.0 per cent observed in Q2 2025. This growth was primarily driven by the Industry and Services sectors, which expanded by 7.3 per cent and 2.7 per cent, respectively. However, the Agriculture sector experienced a contraction of 2.3 per cent, indicating ongoing vulnerabilities within this crucial segment. Taxes less subsidies on products demonstrated robust growth, increasing by 11.9 per cent.
Industrial activity showed positive momentum, with the Index of Industrial Production (IIP) increasing by 0.2 per cent in July 2026 compared to July 2025, reaching 101.5. This was largely propelled by notable increases in the manufacture of Food products (10.1 per cent) and Other non-metallic mineral products (6.3 per cent). Furthermore, the Purchasing Managers’ Indices (PMIs) for both Manufacturing and Services activities indicated an expansion in August 2026, signaling improving business sentiment and operational scales.
In the global energy market, crude oil prices experienced a volatile week. Initially, prices surged to their highest levels since late May 2026 due to heightened supply concerns following attacks on Saudi oil pipelines. However, these concerns eased as Saudi Arabia initiated crude oil supplies through alternative routes, leading to a subsequent decline in prices. Despite this drop, both Brent and WTI crude benchmarks remained above US dollars 100 per barrel by the end of the period. Compared to the previous week, Brent and WTI crude oil prices decreased by US dollars 3.89 and US dollars 1.38 per barrel, respectively.
Monetary Sector: Interest Rates Edge Up, Stock Market Dips
The monetary sector witnessed minor upward adjustments in interest rates. The Weekly Average Weighted Prime Lending Rate (AWPR) for the week ending 18 September 2026 increased by 3 basis points (bps) to 10.76 per cent. Similarly, the Average Weighted Call Money Rate (AWCMR) rose to 8.91 per cent on 18 September 2026, up from 8.87 per cent the previous week. Reserve money also increased, mainly attributed to a rise in currency in circulation.
Total outstanding market liquidity remained in surplus, recording Rs. 359.79 billion by 18 September 2026, a slight decrease from Rs. 366.11 billion at the end of the previous week.
On the equities front, the Colombo Stock Exchange experienced a downturn. By 18 September 2026, the All-Share Price Index (ASPI) decreased by 1.53 per cent to 21,056.26 points, while the S&P SL 20 Index fell by 1.23 per cent to 5,928.89 points, reflecting a bearish sentiment compared to the previous week.
Fiscal Sector: Stable Treasury Yields, Decline in Foreign Investor Holdings
In the fiscal sector, Treasury Bill yields largely remained stable across both primary and secondary markets during the reporting week. However, Treasury Bond yields observed a marginal increase in the secondary market. A notable development was the decrease of approximately 3.4 per cent in the rupee value of Treasury Bills and Treasury Bonds held by foreign investors compared to the preceding week, suggesting a slight reduction in foreign confidence or portfolio rebalancing.
Despite this, demand for government securities remained strong, with Treasury Bill auctions experiencing an oversubscription rate of approximately 2.5 times and Treasury Bond auctions seeing an oversubscription rate of approximately 2.1 times. Furthermore, the total volume of secondary market transactions in Treasury Bills and Treasury Bonds surged by approximately 15.6 per cent during the reporting week.
External Sector: Rupee Depreciation and Tourism Earnings
The external sector continues to face challenges, with the Sri Lanka Rupee depreciating by 6.7 per cent against the US dollar year-to-date as of 18 September 2026. This ongoing depreciation impacts import costs and external debt servicing.
Earnings from tourism, a vital foreign exchange earner for Sri Lanka, amounted to US dollars 264.4 million in August 2026. While this represents an increase from US dollars 258.9 million in August 2025, it marks a slight decrease from the US dollars 285.5 million recorded in July 2026.
The latest CBSL Weekly Economic Indicators paint a picture of a Sri Lankan economy demonstrating resilience in certain sectors, particularly industry and services, while navigating global commodity price volatility and managing currency depreciation. The stability in government securities auctions is a positive sign, though the dip in foreign investor holdings warrants close monitoring for sustainable economic recovery and growth.
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