Business

War in Middle East sends shockwaves through Sri Lanka’s export sector

Published

1 month ago

2026/03/4

Indhra Kaushal Rajapaksa

Sri Lanka’s export sector is bracing for fresh turbulence as the escalating conflict involving Iran and parts of the Middle East begins to send shockwaves through global trade, shipping and energy markets.

Though geographically distant from the conflict zone, Sri Lanka’s exporters are far from insulated. Industry leaders warn that higher freight costs, rising oil prices and increased trade risks could erode margins and disrupt key markets if hostilities intensify.

President of the National Chamber of Exporters of Sri Lanka, Indhra Kaushal Rajapaksa told The Island Financial Review that the situation is being closely monitored, as the export community is already feeling the early tremors of global instability.

“Sri Lanka may not be directly involved in the conflict, but we are deeply integrated into global supply chains. Any disruption in the Middle East immediately translates into higher costs and operational uncertainty for our exporters,” Rajapaksa said.

A major concern is the vulnerability of critical maritime corridors such as the Strait of Hormuz and the Red Sea, through which a significant share of global trade and oil shipments pass. Shipping lines have begun rerouting vessels and imposing emergency risk surcharges amid mounting security threats, while insurers are reassessing risk exposure in the region.

“Freight costs had only recently begun stabilising after the pandemic-era disruptions. Now, with vessels avoiding high-risk zones and insurers raising premiums, exporters are once again facing unpredictable shipping expenses,” he noted.

For time-sensitive exports such as apparel and perishables, delays could undermine Sri Lanka’s hard-earned reputation for reliability in competitive markets.

Exporters fear that prolonged instability could trigger sustained freight rate hikes similar to those witnessed during previous global disruptions.

The conflict has also driven global oil prices upward on fears of supply disruptions and shipping bottlenecks. Given that the Middle East accounts for a substantial share of global crude oil output, even perceived threats to supply have immediate price implications.

For Sri Lankan exporters, higher oil prices translate directly into increased fuel, electricity and transportation costs. Manufacturing sectors such as apparel, rubber products, plastics and food processing are particularly vulnerable, as energy forms a core input cost across operations.

“Energy is a fundamental cost component in nearly all export industries. When global oil prices rise, the impact cascades through logistics, production and even raw material pricing,” Rajapaksa explained, warning that sustained high energy costs could squeeze already thin margins.

Beyond cost pressures, the Middle East remains a crucial destination for Sri Lankan exports, especially tea and food products. Around 25 percent of Sri Lanka’s tea exports are shipped to Middle Eastern markets, making the region strategically important for the plantation sector.

“The Middle East is not just a transit route; it is a major market. If economic activity slows in those countries, or if banking and payment channels become complicated due to the conflict, our exporters will face direct consequences,” he cautioned.

War conditions also elevate trade finance and insurance risks. Cargo insurance premiums are climbing, and banks may adopt a more cautious stance toward trade credit involving affected regions.

Exporters could face payment delays, tighter financing conditions and higher compliance requirements, raising the overall cost and complexity of doing business.

This comes at a sensitive time for Sri Lanka’s economy, which is navigating recovery. Higher global oil prices would widen the import bill, potentially exerting pressure on the rupee and fuelling domestic inflation. While currency depreciation can sometimes enhance export competitiveness, rising input costs may offset any exchange rate advantage.

Despite the challenges, he pointed to potential opportunities if Sri Lanka responds strategically. As global buyers seek to diversify supply chains away from unstable regions, Sri Lanka could position itself as a reliable sourcing hub for apparel, rubber-based products, processed foods and value-added agricultural goods.

“In every global disruption there are risks, but there are also opportunities. If Sri Lanka strengthens trade facilitation, improves logistics efficiency and ensures policy consistency, we can attract buyers looking for stable alternatives,” he said.

He stressed that resilience and preparedness would be critical in the weeks ahead, as exporters closely watch developments in the Middle East and global energy markets, aware that distant conflicts can swiftly reshape local economic realities.

By Ifham Nizam

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Business

Sri Lanka secures IMF staff-level deal for USD 700 million tranche

Published

12 hours ago

2026/04/10

Thilina Walpola

Sri Lanka has reached a staff-level agreement with the International Monetary Fund to secure the next tranche of funding under its ongoing bailout programme, marking a key step in the country’s fragile economic recovery.

The agreement, announced this week, will enable Sri Lanka to access approximately USD 700 million, subject to approval by the IMF Executive Board. The funds form part of the USD 2.9 billion Extended Fund Facility (EFF) programme agreed following the 2022 economic crisis.

The latest development covers the combined fifth and sixth reviews of Sri Lanka’s reform programme, indicating that the country has made sufficient progress to move forward, while highlighting the need to sustain reform efforts.

Sri Lanka’s economy has shown signs of stabilisation in recent months, supported by improved revenue collection, easing inflation, and a gradual buildup of foreign reserves. However, the recovery remains vulnerable to both domestic and external pressures.

By Ifham Nizam

Business

Israeli attack on Lebanon triggers local stock market volatility

Published

12 hours ago

2026/04/10

Thilina Walpola

Initially CSE trading was somewhat volatile despite the ceasefire in West Asia but it experienced further volatility after Israel attacked Lebanon yesterday.

However, the IMF delegation which is now in Sri Lanka to release two tranches of its relief package created some positive sentiments for the market, analysts said.

The All Share Price Index went down by 73.06 points, while the S and P SL20 rose by 10.57 points.

Turnover stood at Rs 2.96 billion with six crossings. Those crossings were: JKH 5.5 million shares crossed to the tune of Rs 807.6 million and its shares traded at Rs 19.70, CIC Holdings two million shares crossed for Rs 54 million; its shares traded at Rs 32, Access Engineering 600,000 shares crossed for Rs 44.4 million; its shares traded at Rs 74, Central Finance 116,000 shares crossed to the tune of Rs 27.5 million ; its shares sold at Rs 237, LMF 250,000 shares crossed for Rs 22.8 million; its shares fetched Rs 91.10 and Kelani Cables 200,000 shares crossed for Rs 21 million and its shares traded at Rs 105.

In the retail market seven companies that mainly contributed to the turnover were; Dialog Rs237 million (7.5 million shares traded), LMF Rs 203 million (22 million shares traded), Colombo Dockyard Rs 199.7 million (1.1 million shares traded), HBA Foods Rs 163 million (18.5 million shares traded), JKH Rs 156 million (7.8 million shares traded), JKH Rs 156 million (7.8 million shares traded), Softlogic Holdings Rs 117 million (9.6 million shares traded) and Acme Printers Rs 107 million (15.6 million shares traded). During the day 133.3 million share volumes changed hands in 23666 transactions.

It is said that manufacturing sector counters, like JKH, performed well, while food sector counters, especially LMF and HBA Foods, performed well. Other sectors too performed somewhat well during the day.

Yesterday the rupee was quoted a Rs 315.42/48 to the US dollar in the spot market from 315.30/40 the previous day, dealers said, while bond yields were quoted higher.

By Hiran H. Senewiratne

Business

HNB Assurance marks 25 years with strategic transformation to ‘HNB Life’

Published

12 hours ago

2026/04/10

Thilina Walpola

Highlights from the new brand reveal as HNB Assurance transforms into HNB Life

Marking 25 years of trust, growth, and service excellence, HNB Assurance PLC has unveiled its new corporate identity, transitioning to HNB Life PLC a strategic evolution that reflects the company’s forward-looking vision and commitment to empowering lives with protection and the freedom to thrive, no matter where life takes them.

This milestone signifies more than a change in name or visual identity. It represents a deliberate transformation shaped by strong performance over the past few years, during which the company has achieved remarkable growth, strengthened its market position and enhanced its customer-centric capabilities.

The newly introduced logo, inspired by the form of a wing, symbolises HNB Life’s role as a proactive enabler. It reflects the organisation’s commitment to supporting individuals in navigating life’s journey with confidence, empowering them to pursue their aspirations and live life on their own terms.

The official unveiling took place at a launch event attended by key stakeholders, strategic business partners, well-wishers and employees.

Addressing the gathering, Chairman, Stuart Chapman highlighted the significance of this transformation, stating, “As we mark 25 years of progress, the transition to HNB Life reflects our strategic intent to evolve with the changing needs of our customers and the broader market. This new identity embodies our purpose, to enable and empower individuals to achieve what they truly aspire to in life, with confidence and security. As a company we are extremely excited on what the future holds for as, as we build on an incredible foundation laid over the past two and a half decades.”

The new Vision of the Company is “To be the leader in empowering lives with protection and freedom to thrive, no matter where life takes them”.