📈 Sri Lanka at Risk of Food Inflation Amid Rising Fertilizer Costs

Emerging Asia, including Sri Lanka, faces significant food-security risks as prolonged geopolitical tensions in the Gulf disrupt fertilizer supply chains and drive up production costs. • Fertilizer Supply & Pricing: Prices for nitrogen-based urea have surged 50% to roughly US$ 700 per tonne. High natural gas prices and shipping disruptions in the Gulf—a major production hub—are expected to keep costs elevated through mid-2026. • Domestic Impact: Sri Lanka is identified as highly vulnerable due to its net food import dependence (mid-teens %) and reliance on fertilizer for domestic yields. Reduced application rates could slash crop yields by up to 43%, leading to margin pressure for farmers and higher consumer prices later in the year. • Regional Context: • Sri Lanka, Bangladesh, and the Philippines face similar exposure. • Maldives sees the highest import dependence at 78.3%. • China is expected to maintain export restrictions on fertilizer until mid-year. • Economic Outlook: If oil remains above US$ 100/barrel and conflict persists, acute food insecurity in Asia could rise by 24%. Governments may face increased fiscal pressure if subsidies are introduced to stabilize prices, while a lack of support could heighten social tensions due to food inflation.