Sri Lanka could face a ‘Balance of Payment’ crisis, if the Middle East conflict continues for a longer period, economist Talal Rafi has warned.
Speaking to Ada Derana, economist Rafi noted that the global oil prices will continue to rise while the production could also be impacted since refineries in the region have also been attacked in recent days.
He said in addition to the increase in oil prices, food prices could also rise which will lead to a surge in global inflation.
According to economist Talal Rafi, Sri Lanka spends around US$ 4.5 billion annually on fuel imports and therefore if prices increase by around 10%, it will have a major bearing on the government’s current account.
He said if oil prices hit the US$ 100-mark, it is likely that Sri Lanka will face a ‘Balance of Payment’ crisis.
Talal Rafi noted that the ongoing conflict will also have an impact on Sri Lanka’s remittances and earnings through the tourism sector.
While the ongoing conflict already has a bearing, a prolonged war will have a devastating impact on the economy, according to economist Talal Rafi.
