Business sentiment in Sri Lanka moderated during the second quarter of 2026 as heightened macroeconomic uncertainties driven by the conflict in the Middle East weighed on commercial operations. However, Sri Lankan firms expect a relative rebound in overall confidence in the third quarter as global tensions ease.

According to the latest quarterly Business Outlook Survey (BOS) released by the Central Bank of Sri Lanka (CBSL), the Business Condition Index (BCI), which captures firms' assessments of both current and future operating environments, eased to 101 in Q2 2026 from 104 in the preceding quarter. Despite the dip, the index managed to stay marginally above the neutral threshold of 100, which separates expansion from contraction.

Looking ahead to Q3 2026, the Central Bank projects the index to strengthen to 107, reflecting renewed optimism across the corporate sector.