Govt. forms Economic Surveillance Committee to track Middle East conflict impact

The Government has decided to establish a special Committee on Economic Surveillance to monitor the potential economic fallout from the ongoing conflict in Middle East and recommend policy responses to the Cabinet.

The move was approved by the Cabinet of Ministers on Monday following a proposal presented by President Anura Kumara Dissanayake in his capacity as the Finance, Planning and Economic Development Minister. 

Announcing the decision at the weekly post-Cabinet meeting media briefing yesterday, Cabinet Spokesman and Minister Dr. Nalinda Jayatissa said the newly formed committee will function as an early-warning and advisory mechanism, enabling the Government to respond swiftly to emerging risks stemming from the evolving geopolitical situation.

The Middle East remains a critical region for Sri Lanka’s economy, particularly as a source of energy imports and employment for around one million Sri Lankan migrant workers. Any escalation in the conflict could therefore have significant implications for foreign exchange inflows, fuel costs and overall economic activity.

He acknowledged that the evolving geopolitical situation in the Middle East could create ripple effects for Sri Lanka’s fragile economic recovery. “As a very small open economy, Sri Lanka is exposed to external economic shocks due to its dependence on energy imports, remittances from expatriate workers working in the Middle East region and trade and investment relations with that region,” he added.

According to Jayatissa, the committee will be chaired by Labour Minister Dr. Anil Jayantha Fernando and will include leading policymakers, industry representatives and heads of key State institutions.

The members of the committee are expected to include Hanif Yusoof, Dr. Hans Wijayasuriya, Central Bank Governor Dr. Nandalal Weerasinghe, Treasury Secretary Dr. Harshana Suriyapperuma, Senior Economic Adviser to the President Duminda Hulangamuwa, D.J.A.S. De S. Rajakaruna, Channa Gunawardana, Parakrama Dissanayake, and Rajpal Obeysekere.

UNCTAD says Hormuz shipping disruptions raise risks for energy, fertilisers and vulnerable economies

UN Trade and Development (UNCTAD) has released a rapid analysis – Strait of Hormuz Disruptions – Implications for Global Trade and Development – examining the implications of recent disruptions to maritime traffic in the Strait of Hormuz, one of the world’s most critical trade corridors.

The Strait carries around one quarter of global seaborne oil trade, as well as significant volumes of liquefied natural gas and fertilisers. Military escalation in the region has disrupted shipping flows through this narrow passage, raising concerns about ripple effects across energy markets, maritime transport and global supply chains.

Key findings from the analysis:

Energy markets reacted immediately, with Brent crude rising above $ 90 per barrel.

Freight rates for oil tankers and war risk insurance premiums are surging, while marine fuel costs are also rising, increasing shipping costs across supply chains.

Around one-third of global seaborne fertiliser trade (about 16 million tonnes) passes through the Strait, raising concerns about fertiliser access for some of the poorest countries.

Developing economies may be particularly exposed, as high debt burdens and rising borrowing costs limit their ability to absorb new price shocks.

Past crises – including COVID-19 and the war in Ukraine – showed how disruptions to energy, transport and agricultural inputs can quickly spread across interconnected markets.