The Asian Development Bank has warned that food prices in Sri Lanka could rise significantly in the coming months, driven by increasing fertilizer costs amid the ongoing conflict in the Middle East.
The report also notes a decline in the country’s economic growth rate, which has dropped from 5% to 4%.
Speaking on the matter, Lilia Aleksanyan, Senior Economist at the ADB’s Sri Lanka Mission, stated:
“Inflation remained at a negative level last year but is projected to rise to 5.2% this year. This increase will be influenced by higher electricity and fuel prices, before easing again to 4% next year. Fertilizer prices have surged by approximately 50%, which will significantly impact Sri Lanka’s agricultural sector. This presents a critical challenge. Food prices are also expected to rise. With both fertilizer costs and electricity tariffs increasing, the government must focus on providing relief to the most vulnerable groups.”
Meanwhile, Lakshini Fernando, Chief Economic Officer of the ADB, highlighted a decline in tourism, stating that tourist arrivals to Sri Lanka dropped by around 20% in March.
She further explained:
“Tourist arrivals to the country have decreased by about 20% in March. If fewer tourists arrive from the Middle East, we may also see a decline in travelers using Gulf-region airspace to reach Sri Lanka. The effects of this trend are likely to become evident in the coming months.”
