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Renewed war in the Middle East will likely have
disproportionate effects on the Sri Lankan economy.
Three major revenue earners for Sri Lanka depend
in large part on the Middle East:
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| Unsold tea piles up in
the world’s largest tea warehouse owned
by Asia Siyaka of Colombo. |
| Photo by James Overly |
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| Minister of Commerce and
Consumer Affairs Ravi Karunanayake is concerned
about the impact of war on investment and
the cost of living. |
| Photo by James Overly |
• Remittances from Sri Lankan workers
abroad: Nearly one million Sri Lankans work
in the Middle East; their remittances are the
largest single source of foreign exchange revenue
for the country.
• Tea exports: The largest market
for Sri Lankan tea is the Middle East. Tea sales
have slowed dramatically since fears of war arose
in early February. Middle Eastern countries have
responded to heightened security concerns by closing
their borders, which severely limits both legal
and illegal transshipments of tea.
• Tourism: Sri Lanka’s tourism
arrivals have doubled in one year, as a result
of the ceasefire and the rising prospect for permanent
peace. The largest number of tourists comes from
Europe, and the air routes they fly skirt Iraq.
Most observers believe that tourism will suffer
dramatically, as it did following the 9/11 terrorist
attacks and the 1990 Gulf War. Airlines are expected
to severely curtail flights in the area as long
as hostilities continue.
In addition to the effects on revenue, Sir Lanka’s
economy is also suffering the effects of petroleum
price increases during the last two months. The
government, already under pressure from a public
tired of steady increases in the cost of living,
has promised to help alleviate the effects of higher
petrol prices, but the state of government revenues
and the government’s economic reform programs
will limit what the government can do.
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