"On the Brink: Sri Lanka’s Exporters Confront Surging Costs and Global Turmoil", 31 March 2026

Alarmed by the rapidly shifting global situation, exporters in Colombo are bracing themselves.

On Day 32 of the Middle East conflict, the fallout...is being felt sharply in Sri Lanka...

Fuel prices have surged by 35 percent, while electricity costs are set to rise by an average of 10 percent on April 1, implemented across different consumption slabs. In a bid to manage limited resources, the government has mandated a four-day work week, designating Wednesdays as public holidays. Fuel and electricity rationing measures are already in place, extending even to operational limits on air conditioning systems, which must be shut down by 3 p.m. in government and affiliated institutions...

Export data for the last two months show a worrying downturn. Apparel exports to the European Union declined by over 19 percent in February, while year-on-year figures show an 11.46 percent drop from the previous year. This follows an already notable nearly 7 percent year-on-year decline in January...

The implications are significant. Exports have played a critical role in sustaining economic growth, stabilizing the currency, and supporting recovery following the economic crisis of 2022. Any sustained downturn threatens to undermine these fragile gains.

“I don’t want to say there is panic, but people are afraid,” said Felix Fernando, chairman of the Joint Apparel Association Forum (JAAF) and CEO of Omega Line Ltd. “There are a lot of uncertainties. Prices have gone up by more than 30 percent over the past four weeks, and fuel rationing has been introduced.”...

One outcome has been an agreement to prioritize fuel allocation to export industries, following essential sectors such as food and healthcare.

While many companies are incurring losses, Fernando noted that no factories have shut down. Instead, firms are managing costs through careful planning and resource allocation. “Whether it is power or diesel for transportation—because many workers rely on buses organized by manufacturers—the situation is being closely monitored,” he said...

Yohan Lawrence, secretary general, JAAF, highlighted the compounding nature of the cost pressures. “Costs are rising significantly due to the combined impact of fuel imports, energy expenses, and a sharp increase in sea freight rates,” he said. Shipping costs per container have risen by between $1,000 and $1,500 in recent weeks, while air freight rates to the United States have climbed from $3.85 to $6.50 per kilogram.

Import freight costs have also surged, increasing by approximately 75 percent from China and 40 percent from India over the same period. These increases are placing significant strain on exporters, particularly small and medium-sized enterprises that are struggling to absorb the additional costs while remaining competitive, he said....