By a special correspondent
Sri Lanka’s climb to 79th place among 193 economies in the 2026 ease of doing business rankings marks a notable shift in investor sentiment, reflecting growing confidence in the country’s regulatory environment.
The improvement suggests that recent macroeconomic stabilisation efforts particularly easing inflation and reduced borrowing costs are beginning to translate into tangible gains for business activity.
However, beneath this progress lies a more complex reality. While regulatory perceptions have improved, structural weaknesses continue to challenge long-term business sustainability.
The country’s performance in global influence metrics reinforces this mixed picture. According to the Global Soft Power Index by Brand Finance, Sri Lanka slipped to 100th place in 2026, with a score of 33.8 out of 100, down from 97th the previous year.
This decline highlights persistent gaps in governance and institutional credibility, even as economic indicators stabilise.
Soft power defined as the ability to influence global actors through attraction rather than coercion—remains a critical factor in shaping investor confidence.
While Sri Lanka has made gains in areas such as tourism appeal and cultural perception, these have not been matched by improvements in governance-related indicators.
For businesses, this creates a dual reality. On one hand, improved access to capital and lower interest rates are making it easier to start and operate enterprises.
On the other, concerns about policy consistency, regulatory transparency, and institutional effectiveness continue to weigh on long-term investment decisions.
Encouragingly, people-centric indicators show resilience. Sri Lanka has climbed global rankings as a preferred travel destination, with notable gains in perceptions of hospitality, cuisine, and friendliness.
These strengths not only bolster tourism a key foreign exchange earner but also enhance the country’s attractiveness as a place to live and work.
However, experts warn that these gains alone cannot sustain business confidence. The decline in global perceptions of governance suggests that macroeconomic stabilisation has not yet translated into meaningful institutional reform.
Additionally, Sri Lanka’s drop in influential media rankings from 104th to 129th signals reduced global visibility, which could limit its ability to attract foreign investment.
In comparison, countries like the United States continue to dominate global soft power rankings, while regional peers such as Nepal slightly outperform Sri Lanka.
These comparisons highlight the competitive landscape Sri Lanka must navigate.Ultimately, while the improved ease of doing business ranking is a positive signal, sustaining this momentum will require deeper reforms.
Strengthening governance, enhancing institutional trust, and improving global engagement will be essential to convert short-term gains into long-term economic resilience.