• Demand, sales, and investment expected to improve in Q4
• Investment index expected to rise to 123 in Q4, up from 107 in Q3

Demand and sales volumes are expected to improve on a year-on-year (y-o-y) basis in Q4 2024, driven by all three major economic activities, as the economy is expected to continue its growth, the Central Bank of Sri Lanka (CBSL) said.

According to the Business Outlook Survey by CBSL, Demand is expected to grow by 1 index point to 137 in Q4 while sales volumes are expected to grow by 4 points to 141 in the fourth quarter.

It added that in line with the overall developments in demand and sales, capacity utilisation is expected to improve in Q4 in 2024.

Firms reported an increase in input and output prices in Q3 2024 on a year-on-year basis.

Moreover, it said that the balance of opinion on investment is expected to improve in Q4 2024, driven by all three major economic improvements, with the investment index expected to increase to 123 from 107 in Q4.

CBSL said that continuing the turnaround in the previous quarter, most of the firms are expected to invest in expansionary purposes rather than maintaining their existing facilities during this survey round.

Further, the report said that most of the firms, especially in the services activities, expect both input and output prices to increase in Q4 2024 on a y-o-y basis.

Continuation in tight credit conditions was reported during the third quarter. The main reason highlighted by respondents was higher credit standards in banks’ lending facilities.

CBSL forecasts that the balance of opinion on demand for bank credit is mainly intended for operational expenditure, as the Credit Demand Index is expected to grow by 8 points to 136 in Q4 2024.