Sri Lanka’s GDP growth slows amid rising oil prices from Middle East conflict

Sri Lanka’s economy expanded more slowly than anticipated in the last quarter, impacted by rising oil prices amid ongoing hostilities in the Middle East, according to a Bloomberg Economics report. The country’s real GDP grew by 5.1% year-on-year in the first quarter of 2026, slightly above the central bank’s expectations but below broader forecasts. The higher oil prices, driven by regional conflict, have contributed to increased import costs and inflationary pressures, affecting overall economic performance. Market participants are closely observing these developments as they may influence the pricing of oil futures. The recent economic data from Sri Lanka comes at a time when the prediction markets are evaluating the potential for crude oil to reach a new all-time high by the end of the year. The current pricing suggests that the likelihood of this occurring by September 30 is low, with a 1.9% YES outcome, but the December 31 outlook is more supportive of a YES scenario, priced at 15.5%. These figures reflect the market’s assessment of sustained high oil prices due to geopolitical tensions. Key Takeaways Sri Lanka’s slower-than-expected economic growth appears to be linked to ris...