Tuesday Apr 21, 2026
Tuesday Apr 21, 2026
Tuesday, 21 April 2026 03:11 - - {{hitsCtrl.values.hits}}
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| Italian Ambassador to Sri Lanka and Maldives Damiano Francovigh | Brandix Group Managing Director Hasitha Premaratne | Acorn Group Partner Harith Perera | Shippers Academy Colombo Founder and CEO Rohan Masakorala | Moderator-Advocata Institute CEO Dhananath Fernando |
By Divya Thotawatte
Sri Lanka’s fragile economic recovery in 2026 is being tested by fast-escalating geopolitical tensions, and early signs of disruption were already emerging within tourism, exports, and shipping, said industry leaders recently.
These statements were made during a business forum titled, ‘Present Geopolitical Tensions: Navigating Their Impacts on Sri Lanka’s Economic Recovery in 2026’. Organised by the Sri Lanka-Italy Business Council, it drew industry leaders and stakeholders to discuss strategies to help Sri Lankan businesses and industries navigate its way through the rapidly evolving global situation that threatened the country’s recovery.
Speaking at the event, Ambassador of Italy to Sri Lanka and the Maldives Damiano Francovigh explained that while headlines focused on visible disruptions like fuel shortages and rising energy prices, long-term consequences would start to emerge differently.
“All that we are seeing happening now is a world where smaller countries with similar interests will deepen their economic integration and diversify trade and partnership with other countries.” – Ambassador of Italy to Sri Lanka and the Maldives Damiano Francovigh
“We are moving in a global arena from an order which is based on rules, to an order which is more based on power, which in turn is creating what we are seeing: rising energy prices and a movement in defence spending,” he said, advising that smaller and medium-sized economies like Italy and Sri Lanka must act together accordingly.
He stressed that the countries must strengthen alliances and diversify trade partnerships to remain relevant. Echoing words by Canadian Prime Minister Mark Carney at the 2026 World Economic Forum in Davos, he warned, “if you are not at the table, you are on the menu list,” underlining the urgent need for deeper regional cooperation and faster decision-making.
“All that we are seeing happening now is a world where smaller countries with similar interests will deepen their economic integration and diversify trade and partnership with other countries.”
The Ambassador further advised that Sri Lanka should shift from a relatively closed economic model and integrate more deeply with global markets. While the country has maintained an independent and neutral stance, barriers such as tariffs and regulatory inefficiencies were unappealing to foreign investors, he said.
Impact on tourism industry
“One positive thing is we are getting into the low season. Our peak is finished… the perception about Sri Lanka is not damaged with this. What we really want is connectivity back.” – Acorn Group Partner and Acorn Leisure Director Harith Perera
Speaking on the state of the tourism industry, Acorn Group Partner and Acorn Leisure Director Harith Perera, while acknowledging industry resilience, noted that there were disruptions to sector performance due to the external shocks.
Whereas early 2026 showed promise with January and February recording around 20% growth year-on-year, momentum had fallen in March. “Till 22 March, there’s a 17.4% degrowth. One-third of our airlines are not functioning. Our estimate is $ 65 million lost in revenue.”
Some key vulnerabilities and challenges lay in air connectivity, Perera said. Nearly one-third of tourist arrivals depended on Middle Eastern carriers, and disruptions in the region directly impacted European tourist flows. Even though markets like India, China, and Australia showed positive growth, declines in European arrivals, especially Germany, still impacted the overall performance.
“One positive thing is we are getting into the low season. Our peak is finished… the perception about Sri Lanka is not damaged with this. What we really want is connectivity back,” he said, pointing out that the resumption of Middle Eastern flights would result in a rapid rebound.
While there was the potential for a “super summer” if conditions stabilise, there was still the lack of a coherent tourism strategy, Perera added, noting that the industry still lacked a clear positioning and coordinated global campaign.
Exports performance
Speaking on the export sector, Brandix Lanka Group Managing Director Hasitha Premaratne highlighted a slowly evolving impact where during the first 30 days of the crisis, the impact was absorbed due to existing inventories and stable order books.
“If you see the export numbers for the month, you will see that the numbers are pretty much in line with the forecast. Now, if things continue beyond June, then I think the game is going to change. It’s going to be serious stuff.” – Brandix Lanka Group Managing Director Hasitha Premaratne
“Our priority was to keep the supplies intact and make sure that we can run the operation. As we expected, the impact is not so significant so far, because shipments went as usual.”
However, as the crisis extends, cost pressures are beginning to intensify. Premaratne identified three key areas: rising energy costs, logistics disruptions, and increased raw material prices, especially petroleum-based inputs used in synthetic textiles. Freight costs had also surged 35-40%, while some buyers had even begun requesting extended credit terms.
Yet, export numbers have remained stable, for the time being. “If you see the export numbers for the month, you will see that the numbers are pretty much in line with the forecast. Now, if things continue beyond June, then I think the game is going to change. It’s going to be serious stuff.”
Premaratne emphasised that businesses must adapt to a “new reality” of continuous external shocks, and focus on internal efficiencies and cost control. “The only way you can protect yourself is by controlling what is in your hand.”
Risks and opportunities in the shipping sector
Shippers Academy Colombo Founder and CEO Rohan Masakorala also explained that while the current disruptions had still caused only “about one-third of COVID (level impact)”, the situation could escalate rapidly if the geopolitical tensions persisted. However, there was also both risk and opportunity in the shipping sector.
He explained that supply chains were under strain, with around 35% of global shipping routes affected due to instability in key choke points such as the Strait of Hormuz and Suez Canal. Freight and insurance costs have also doubled in some cases while port congestion was rising across the region, including in Colombo.
“If it goes beyond Q2, there is going to be a global recession. If this continues beyond 60 days, the Middle East economy can have a 20% GDP drop. That is massive.” This would cause significant spillover effects on remittances, trade, and tourism for Sri Lanka, he added.
“Now everyone understands the importance of this shipping route. So, there will be more investment… more big players who will consider investing in Sri Lanka.” – Shippers Academy Colombo Founder and CEO Rohan Masakorala
According to Masakorala, there was still an upside where heightened global recognition of strategic shipping routes could attract future investment into Sri Lanka’s maritime sector.
“Now everyone understands the importance of this shipping route. So, there will be more investment… more big players who will consider investing in Sri Lanka.”
However, some opportunities were difficult for Sri Lanka to realise in the short-term due to structural and capacity constraints, Masakorala said, warning against rapidly positioning Mattala Rajapaksa International Airport as a regional hub. “It looks nice on paper, but it doesn’t work like that.”
He urged a more tactical approach, suggesting that Sri Lanka should instead focus on key markets like India and China, where engaging major carriers like IndiGo and offering targeted incentives could bring quicker gains. Yet, these measures should have been planned and taken “five to ten years ago” and not merely in response to the crisis, he said.
The discussion was expertly moderated by Advocata Institute CEO Dhananath Fernando.
- Pix by Upul Abayasekara
