ME Conflict Triggers Early Losses and Supply Chain Risks 📈

The ongoing Middle East crisis is impacting key Sri Lankan industries through revenue losses, rising input costs, and logistical bottlenecks based on private sector reports. • Tourism Sector losing US$ 80–100 Mn in monthly revenue. European arrivals for March are down 30–40%, with a projected 50% drop in real revenue as high-spenders stay away. Forward bookings for May–July remain "dreadful." • Apparel & Textiles Order books remain stable for the next few quarters, but Brandix warns of significant impact from April. Risks include rising costs for petroleum-based synthetic fabrics, dyes, and chemicals, alongside surging freight charges. • Tea The Middle East accounts for 55% of export volumes. Shipments to Iraq, Iran, and Jordan were temporarily halted or redirected. While auction prices have stabilized, higher insurance premiums and freight surcharges are squeezing margins. • Rubber & Manufacturing Drastic cost shocks reported as 90% of inputs are petroleum-based; synthetic rubber prices have surged by 50%. DSI Samson Group warns of "dark times" post-April holidays once current inventories are exhausted. • Macro Risks • Logistics: Rising freight and insurance costs across all sectors. • Energy: High sensitivity to petroleum-linked utility and transport costs. • Employment: Risks to smallholder incomes and worker mobility if fuel disruptions persist. _Source: Industry briefings (Provisional Data)_