News & market updates

World Bank will provide immediate financial relief and policy support to countries hit by the Middle East conflict as commodity and shipping disruptions push up costs—crude oil ~+40% Feb–Mar, LNG to Asia ~+66%, and nitrogen fertilisers ~+50% in March.

Iran's Islamic Revolutionary Guard Corps said it prohibits shipping to and from ports of US- and Israeli-allied countries and declared the Strait of Hormuz closed, warning vessels will face harsh measures; three container ships were blocked today.

JAT Holdings PLC has established a local cabinetry manufacturing facility in Perth (operations commenced July 2025) and has generated over LKR 100 million in revenue since inception; this complements its SEAFORM premium offering, which has produced over LKR 350 million to date.

Blue Arc Manufacturing and the BOI signed an agreement to establish Sri Lanka's first containerised substation assembly factory to manufacture and export containerised substations, skid substations and switch rooms for Australian mining, tunnelling and construction sectors. Units will be assembled and tested to international standards and the company plans to expand into markets including solar and hydro.

Colombo Dockyard (DOCK.N0000) delivered the 10th vessel in the Misje Eco Bulker series, completing its 10-ship contract with Norway's Misje EcoBulk AS. The 89.95m DNV-classed 'Misje Kandy' includes an Energy Storage Battery System for electric hybrid propulsion and contributes to export earnings.

Sri Lanka's export earnings rose 4.22% YoY to $1.4bn in February, with Jan–Feb total exports up 7.56% YoY to $2.89bn (merchandise $1.06bn, services $335m); apparel fell 6.29% YoY to $831.7m in Jan–Feb while ICT/BPM, coconut products and food & beverage exports showed strong gains.

OECD cut its global growth outlook, projecting GDP growth of 2.9% in 2026 and 3.0% in 2027 as higher energy and fertiliser prices linked to the Middle East conflict drive up inflation and weigh on demand.

Asian countries including Vietnam, Thailand, the Philippines, Indonesia and Sri Lanka are lining up to buy Russian oil as the Iran war blocks Middle East supplies, raising the risk that demand may exceed Russian export capacity. India and China already take about 80% of Russian exports and Ukrainian drone strikes have cut roughly 40% of Russia's oil-exporting capacity.

A 30-member Ceylon Chamber of Commerce delegation completed a nine-day International Trade Facilitation programme at IIFT New Delhi covering trade negotiations, trade finance and digital topics such as AI and cyber risk to strengthen trade facilitation and chamber support for exporters.

Ceylon Cold Stores PLC won the Gold Award in the Large Category of the Confectionery Products Sector at the NCE Export Awards 2025 for its 2024/25 export performance. The John Keells subsidiary exports to 16 countries and is expanding ties in India via a partnership with Reliance.

Colombo Stock Exchange opened higher, ASPI up 0.71% to 21,571.61, led by consumer durables and apparel with Teejay Lanka contributing Rs.546.8 million to morning turnover. Commercial Bank and Nations Trust Bank were top positive contributors; National Development Bank was the top negative contributor.

Blue Arc Manufacturing and the BOI signed an agreement to establish Sri Lanka’s first containerized substation assembly factory to manufacture and export skid and containerized substations. Units will be assembled and IEC-tested in Sri Lanka for Australian mining, tunneling and construction projects, using local labour and modular, IoT-capable designs.

ADB pledged an additional $100m in budget support to help Sri Lanka mitigate economic shocks from the West Asia conflict, raising its planned 2026 support to $480m. It is also fast-tracking a $200m emergency loan for cyclone reconstruction and backing port, transport and logistics projects while scaling annual programs to over $1bn.

Sri Lanka's total exports rose 4.22% year-on-year to US$1,401.78 million in February 2026. Services exports grew strongly (up 14.68% to an estimated US$334.9m) while merchandise exports edged up 1.32%, and Jan–Feb total exports were up 7.56% to US$2,896.31m.

Sri Lanka's services exports rose 14.68% to $334.9m in Feb 2026, driven by a 36.66% increase in ICT/BPM earnings to $153.62m while construction services fell 8.10% to $6.35m. Total goods and services exports were $1,401.78 billion, up 4.22%.

Sri Lanka's merchandise exports rose 1.32% to $1,066.88m in February 2026, driven by coconut products, food & beverages and electrical/electronic components; tea, rubber and apparel exports declined.

Opposition Leader Sajith Premadasa called for immediate suspension of the parate law and a targeted relief package to save MSMEs, warning rising fuel prices and higher borrowing costs threaten about 4.5 million MSME entrepreneurs who contribute around 52% of the economy. He urged structured debt restructuring and direct Treasury support for affected businesses.

ADB will provide $100m in additional budget support, raising its planned 2026 budget support for Sri Lanka to $480m; it is also fast-tracking a $200m emergency loan and scaling its annual program to over $1bn to back infrastructure, reforms and human capital.

The Central Bank held the OPR at 7.75% in its 2nd MPC review for 2026, leaving SDFR/SLFR and reserve requirements unchanged. Weekly T‑bill yields rose (91d 7.64%, 182d 7.95%, 364d 8.32%) in an undersubscribed auction; secondary bond market volatile and the rupee firmed slightly to ~Rs.313.8/314.5 with gross official reserves at $7.3bn.

Supply chain and shipping disruptions from the Middle East conflict are likely to keep Sri Lanka's import and energy costs elevated into Q2–Q3. Shipping routings add up to 21-day transit delays and bunker fuel costs have risen nearly 150%, while insurance and war-risk surcharges have also increased.

February tea exports fell to 19.92 M/Kgs (down 0.48 M/Kgs YoY), but Jan–Feb shipments rose to 40.63 M/Kgs (up 0.86 M/Kgs) and cumulative FOB increased to Rs. 1,804.08/kg ($5.83), supported by stronger rupee returns even as dollar earnings weakened.

Fitch warned a prolonged Iran conflict could lift Brent to an adverse scenario averaging $128/bbl in Q2 2026 and $100/bbl for the year, heightening downside risks to Asia‑Pacific sovereign credit profiles through higher inflation, weaker growth and strained fiscal balances.

MAS Holdings said two subsidiaries, Texco Ltd and Noyon Lanka, have become bluesign System Partners, bringing 75% of MAS's wet-processing facilities into alignment with bluesign's chemical-management standards under its Plan for Change 2030 roadmap.

Trade Finance Association of Bankers held its 29th AGM and elected Rajaratnam Naguleswaran (Assistant VP, DFCC Bank PLC) as President for 2026/2027. He outlined five priorities: technical excellence, digital trade finance, export/SME support, enhanced risk management and stronger member engagement.

ADB will provide $100 million in additional budget support to Sri Lanka, raising its planned 2026 budget support to $480 million. ADB is also fast-tracking a $200 million emergency assistance loan to restore transport networks and irrigation, and plans to scale up its program to over $1 billion to support infrastructure and reforms.

Middle East war and near-closure of the Strait of Hormuz have caused port congestion that left hundreds of used cars (including luxury models) stranded or delayed into Sri Lanka, forcing diversions, offloads at alternative ports and higher freight and storage costs for exporters.

The Central Bank of Sri Lanka kept the Overnight Policy Rate at 7.75% and said low inflation (1.6% y/y in Feb) provides space to absorb higher energy costs, forecasting inflation will reach 5% in Q2-2026. It noted USD 7.3bn reserves, some rupee depreciation pressure and risks to tourism, trade and remittances.

Monetary Policy Board kept the Overnight Policy Rate unchanged at 7.75%. Inflation was 1.6% y-o-y in Feb 2026 and is expected to reach 5% in Q2-2026; the board cited higher global energy prices, Middle East conflict risks, and FX reserves of USD 7.3bn as key considerations.

ADB raised Sri Lanka's allocation for this year to $480m (up from $380m) and will promptly release $200m. The Cabinet has approved plans to secure $620m for five sub-programs covering trade/industrial development, MSME finance, water/sanitation rehabilitation, resilience and agricultural value-chain support.

ADB announced a financial support package including fast-disbursing budget support and reactivated trade and supply-chain finance (including for oil imports) to help developing member countries manage economic fallout from the Middle East conflict. The bank will use countercyclical resources and monitor energy, inflation and financial conditions.