Sri Lanka’s domestic economic risks have increased in the first half of 2026, while concerns over the credibility of financial institutions also grew, Advocata Institute CEO Dhananath Fernando said on Tuesday (13).

Speaking on AdvocataPlus, Fernando said: “Domestic macroeconomic risks had increased during the first half of 2026, while risks associated with financial institutions had also risen amid fraud incidents involving major banks.”

“Developments in the United States of America (USA), including the introduction of tariffs, had shifted market sentiment towards global economic risks,” Fernando said.

Fernando also raised concerns over the credibility of financial institutions following an incident involving a $ 2.5 million payment to a hacker. 

“Domestic macroeconomic uncertainty was a major concern among market participants in the second half of 2024, with approximately one-third of respondents identifying it as their primary risk factor. This encompassed issues such as the inability to secure funding, rising costs, and debt-related problems,” he said.

Fernando said: “Approximately one-third of respondents expected a difficult economic environment as 2025 approached, while overall risks remained relatively high during 2024-2025.”

Fernando added: “However, the domestic macroeconomic risks gradually eased. By the second half of 2025, we observed that concerns regarding domestic macroeconomic risk had diminished, shifting the primary risk focus toward global macroeconomic factors.”

Despite renewed concerns in 2026, Fernando said: “Market participants considered the likelihood of a major negative impact in the short term to be relatively low, although moderate risks were expected to persist over the longer term.”