Industry leaders warned that Sri Lanka’s economic recovery in 2026 is being tested by escalating geopolitical tensions, with tourism down 17.4% in the first 22 days of March, one-third of airline connectivity disrupted and freight costs up 35-40%, at a business forum reported by Daily FT.
Acorn Group Partner Harith Perera said tourism momentum collapsed in March after January and February growth of roughly 20% year-on-year. “Till 22 March, there’s a 17.4% degrowth. One-third of our airlines are not functioning. Our estimate is $65 million lost in revenue,” he said. Perera noted that nearly one-third of arrivals depend on Middle Eastern carriers and said European flows, especially from Germany, had been hit. Entering the low season limits further damage, but “we really want connectivity back.”
Brandix Lanka Group Managing Director Hasitha Premaratne said export numbers remained in line with forecasts during the first 30 days of the crisis, absorbed by inventory and stable order books. Rising energy costs, logistics disruptions and petroleum-based raw-material prices are now tightening. “If things continue beyond June, then the game is going to change. It’s going to be serious stuff,” he warned.
Shippers Academy Colombo CEO Rohan Masakorala said around 35% of global shipping routes are affected by instability in the Strait of Hormuz and the Suez Canal, with freight and insurance costs doubling in some cases and port congestion rising, including at Colombo. He warned that a Q2-plus escalation could trigger a global recession and a 20% GDP drop in the Middle East.
Italian Ambassador Damiano Francovigh urged Sri Lanka to move away from a closed economic model and deepen trade partnerships, quoting Canadian Prime Minister Mark Carney’s Davos line: “If you are not at the table, you are on the menu list.”
The forum was organised by the Sri Lanka-Italy Business Council and moderated by Advocata Institute CEO Dhananath Fernando.
Sri Lanka’s tourism arrivals slowed 27% in April as Middle Eastern carriers reduced flights. March tourism revenue fell 37% year-on-year. The Hormuz blockade is the primary driver of the freight and connectivity disruptions.
