A mixed but cautiously optimistic outlook prevails as Budget 2025 approaches

Confidence about the economy in corporate circles remains subdued, despite the rise of the LMD-PEPPERCUBE Business Confidence Index (BCI), which perhaps suggests a sense of caution ahead of Budget 2025.

According to Pepper-Cube Consultants, the newly elected government has been well received by the corporate community, as reflected in how economic sentiment has gained ground since the presidential election.

THE ECONOMY In the first week of December, 41 percent of BCI survey participants expressed confidence about the economy ‘improving’ over the next 12 months, maintaining the same level for the third consecutive month.

It is noteworthy that only eight percent viewed the economy with optimism before the presidential election in September.

Meanwhile, well over half the respondents (57%) believe the economy will ‘stay the same,’ marking a one percent increase.

SALES VOLUMES There’s been a shift in sentiment among salespeople – in December, 53 percent of executives said they expect an improvement in their sales volumes over the next 12 months – that’s a seven percent increase from November’s outcome.

In the meantime, 45 percent anticipate their sales numbers to ‘stay the same,’ which represents a six point decline from 51 percent in November.

Forty-seven percent of respondents report an ‘increase’ in sales volumes compared to last month, marking a whopping 21 percent rise from 26 percent reported in November.

Additionally, 37 percent of survey participants say their numbers ‘stayed the same,’ reflecting a notable decline of 23 points from the previous month (60%). And 16 percent report lower sales volumes (up from 14% a month ago).

Looking ahead, expectations of higher sales volumes over the next three months have risen by 11 points to 45 percent – from 34 in November.

Meanwhile, just over half (52%) of respondents believe their sales volumes will ‘stay the same,’ marking a six percentage point decrease. Only three percent expect their sales numbers to ‘get worse’ over the next three months (a 5% drop compared to November).

INVESTMENT CLIMATE The investment climate is showing signs of improvement with positive indicators for the third consecutive month in December.

Fourteen percent now consider Sri Lanka’s investment prospects as ‘very good’ – up from 11 percent in the previous month. However, the percentage of participants that view the outlook as ‘good’ has dropped by 12 points to 40 percent.

Thirty-nine percent believe the investment climate is ‘fair,’ reflecting an 11 point increase from 28 percent in November. Those rating the outlook as ‘poor’ or ‘very poor’ account for seven percent (down two percentage points from November’s 9%).

EMPLOYMENT PROSPECTS A notable 30 percent of businesses plan to ‘increase’ their staff numbers while a large majority (67%) intend to maintain their current workforce – a decrease from 76 percent in the month prior.

And only three percent (1% in November) say they may consider downsizing their human resources within the next six months.

– LMD