- Many ME orders decline
- LKR depreciation to cause major blow in medium/long term
- Regional competitiveness undermined
Sri Lankan exporters are sounding the alarm over growing trade costs and declining orders from the Middle East, while cautioning that the ongoing depreciation of the rupee will deal a significant blow to the export sector in the medium to long term.
Speaking to The Sunday Morning Business, National Chamber of Exporters (NCE) Secretary General and Chief Executive Officer Shiham Marikar warned that the current conflict in the Middle East was generating severe external shocks for local exporters, with freight costs and insurance premium charges rising sharply as a direct consequence of the crisis.
He noted that the surge in costs was translating into higher prices for Sri Lankan goods reaching those markets, undermining the country’s competitiveness in the region.
“Our regular buyers in the region have also stopped placing their orders. In the Middle East region, Iran was a regular buyer; it buys tea and various other products. It has now stopped, cancelled, or postponed orders,” he stated.
Turning to the recent depreciation of the rupee, Marikar pushed back against what he described as a widespread misconception within the business community that a weaker currency automatically benefitted exporters.
He cautioned that Sri Lanka’s export industry was heavily reliant on imported raw materials, meaning that any rupee-denominated earning gains from the depreciation were effectively offset by increased import costs, compounded further by rising energy prices.
“Even though on paper there could be minute benefits in the short term, in the medium and long term the current currency depreciation will have a negative impact on the export industry,” he stated.
Against this backdrop, Marikar expressed concern over whether Sri Lanka could realistically achieve its $ 20 billion export target set for this year.
Sri Lanka directs approximately 6–8% of its total exports to the Middle East, with Dubai commanding the largest share at 32%, followed by Iraq at 18% and Saudi Arabia at 12%.
A significant portion of Sri Lankan shipments to the region is routed through Dubai, while the United Arab Emirates continues to rank among Sri Lanka’s top 10 export markets, indicating the vulnerability of the export sector amid the ongoing crisis.
Sri Lanka’s export exposure to the region is particularly pronounced in tea. In 2025, Sri Lanka’s exports to the Middle East amounted to $ 1.084 billion, with tea accounting for 52% of that total. Apparel, gems and jewellery, and coconut products make up the remainder, highlighting the breadth of sectors now caught in the crossfire of regional instability.