Nearly 40% of local imports hit by global price shocks: IPS warns
Nearly two-fifths of the country’s import basket is directly exposed to global commodity price shocks, underscoring the economy’s vulnerability to external supply disruptions, research from the Institute of Policy Studies of Sri Lanka (IPS) highlighted.
The analysis shows that 39.3 percent of Sri Lanka’s imports, valued at about US$ 8.3 billion across 951 product lines, are affected by rising global commodity prices, according to IPS Research Fellow Dr. Asanka Wijesinghe.
He said the impact extends well beyond petroleum products, spilling into fertiliser, petrochemicals, edible oils and food-related imports, with broad implications for domestic price stability.
“The price shock extends beyond petroleum and petrochemicals to nitrogenous fertiliser, biodiesel alternatives such as palm oil, and food, exerting pressure on food prices,” Wijesinghe said in an analysis released late last week.
The IPS noted that Sri Lanka’s import structure remains closely tied to global commodity cycles, with a significant share of essential goods dependent on energy-intensive or intermediate inputs.
It also cautioned that many of these essential imports are price inelastic in the short term, limiting the economy’s ability to adjust quickly to external shocks without inflationary pass-through.
In its policy observations, the think tank recommended transparent price pass-through mechanisms alongside targeted easing of regulatory constraints in key import channels, particularly food and animal feed inputs.
“Currently, price pass-through and demand management are the best options, while easing regulatory barriers, such as licensing schemes, are necessary to ensure food security,” Dr. Wijesinghe said.
.jpg)
.jpg)
