📈 Middle East Conflict Hits Sri Lanka's Tea Sector, Deepens Economic Strain

The escalating Middle East conflict is heavily impacting Sri Lanka's tea industry, a critical economic pillar that generates US$ 1.50 Bn annually and supports 2.4 million livelihoods. • Export Contraction & Market Drops: Total tea export earnings fell by 17.3% YoY in March to US$ 114.75 Mn, based on EDB data. The Middle East accounts for nearly half of Ceylon tea exports (approx. US$ 680.00 Mn annually). Shipments to Iraq (the largest buyer) dropped by 38% YoY, while exports to the UAE plummeted by 93% YoY. • Corporate & Logistics Impact: Major exporter Dilmah, which derives 30% of its business from the Middle East, reports severe shipping disruptions and rising fuel/logistics inflation. Companies are accelerating market diversification into Canada, South America, and the US to mitigate geopolitical risks. • Socio-Economic & National Strain: More than 50% of estate workers, who earn daily wages of 1,350–1,750 rupees (US$ 4.30–$ 5.50), currently live below the World Bank poverty line. Rising costs have driven up school absenteeism, meal reductions, and labor migration to cities. Nationally, the government has hiked domestic fuel prices by 40%, rationed supplies, and declared Wednesdays a public holiday to conserve energy.