Economic Surveillance Committee has been established by the Sri Lankan government to monitor the potential economic impact of the ongoing Middle East conflict and recommend timely policy responses to safeguard the country’s economic stability.
Economic Surveillance Committee to monitor Middle East conflict impact on Sri Lanka economy
The Sri Lankan government has taken steps to strengthen its monitoring of global economic risks by establishing an Economic Surveillance Committee tasked with assessing the potential fallout from the escalating Middle East conflict and advising policymakers on appropriate responses.
The decision was approved by the Cabinet of Ministers following a proposal submitted by Anura Kumara Dissanayake in his capacity as Minister of Finance, Planning and Economic Development. Officials say the committee will function as a dedicated monitoring body that can identify emerging economic threats early and guide the government’s policy response.
Speaking at the weekly post-Cabinet media briefing, Cabinet Spokesman and Minister Nalinda Jayatissa explained that the Economic Surveillance Committee will operate as an early-warning mechanism. Its role will be to analyse developments related to the Middle East conflict and evaluate how geopolitical changes may influence the Sri Lanka economy.
Sri Lanka’s economic exposure to the Middle East remains significant due to the country’s reliance on energy imports and overseas employment. The region is also home to nearly one million Sri Lankan migrant workers whose remittances represent an important source of foreign exchange for the island’s economy.
Officials note that any escalation in regional tensions could affect several critical economic channels. These include global energy prices, remittance inflows from migrant workers, and broader trade and investment relationships between Sri Lanka and Middle Eastern economies.
“As a very small open economy, Sri Lanka is particularly vulnerable to external shocks,” Jayatissa said, emphasizing that disruptions in global markets could quickly transmit through energy costs, foreign exchange flows, and international trade networks. Monitoring such risks in real time, he added, is essential to ensure policy readiness.
The Economic Surveillance Committee will be chaired by Labour Minister Anil Jayantha Fernando and will include senior policymakers, economic advisers, and representatives from the private sector. The committee’s composition reflects the government’s intention to combine expertise from public institutions and industry in analysing potential economic risks.
Among the members expected to serve on the committee are prominent industry and policy figures including Hanif Yusoof, Hans Wijayasuriya, Central Bank Governor Nandalal Weerasinghe, Treasury Secretary Harshana Suriyapperuma, and Senior Economic Adviser to the President Duminda Hulangamuwa. Additional members include D. J. A. S. De S. Rajakaruna, Channa Gunawardana, Parakrama Dissanayake, and Rajpal Obeysekere.
The committee’s work is expected to focus on evaluating both immediate and longer-term risks to the Sri Lanka economy. These could include potential increases in fuel import costs, disruptions to global shipping routes, and volatility in international commodity markets.
Concerns about global supply chain disruptions have already intensified following recent developments in the region. According to analysis released by United Nations Conference on Trade and Development (UNCTAD), disruptions to maritime traffic through the Strait of Hormuz could have far-reaching implications for international trade and economic stability.
The strategic waterway carries roughly one quarter of global seaborne oil trade and significant volumes of liquefied natural gas. It is also an important corridor for fertiliser shipments used by agricultural economies worldwide. Any prolonged disruption to shipping flows could therefore influence energy prices, transport costs, and agricultural supply chains.
UNCTAD’s rapid analysis indicates that energy markets have already reacted to the uncertainty surrounding the Middle East conflict. Brent crude oil prices recently climbed above $90 per barrel, reflecting investor concerns about possible supply disruptions.
Shipping costs are also rising as tanker freight rates increase and war-risk insurance premiums climb. Marine fuel costs have also risen in response to higher energy prices, which could further elevate shipping expenses across global supply chains.
Another area of concern involves fertiliser trade. Approximately one-third of global seaborne fertiliser shipments—equivalent to about 16 million tonnes—passes through the Strait of Hormuz each year. Any sustained disruption could therefore affect fertiliser availability, particularly in developing economies that depend heavily on imported agricultural inputs.
For countries like Sri Lanka, such global shocks can create a cascade of economic effects. Rising energy prices can increase transport and production costs, while higher fertiliser prices may affect agricultural output and food security. These pressures can ultimately translate into inflationary risks and slower economic growth.
UNCTAD also noted that many developing economies face heightened vulnerability because of existing debt burdens and rising borrowing costs. Limited fiscal space can make it more difficult for governments to absorb new economic shocks triggered by geopolitical instability.
Sri Lankan policymakers remain cautious given the country’s recent economic recovery following multiple external crises in recent years. Events such as the COVID-19 pandemic and the war in Ukraine demonstrated how disruptions in energy, logistics, and commodity markets can quickly spread across global economic systems.
Against this backdrop, the establishment of the Economic Surveillance Committee represents an effort to strengthen the country’s economic resilience by closely tracking global developments. By analysing evolving risks associated with the Middle East conflict, the government hopes to prepare timely policy responses that can help mitigate potential economic disruptions.