ECONOMYNEXT – A looming recession in Sri Lanka’s main export markets is threatening the island nation’s top export garment sector as orders have slowed down significantly from January next year, government and industry officials said.
The dip could slow down Sri Lanka’s efforts to move out of the unprecedented economic crisis resulted after failed economic policies and heavy money printing under previous President Gotabaya Rajapaksa.
The apparel industry accounts for nearly half of the island nation’s total export earnings. Textiles and garments contributed $5.4 billion last year out of the total annual $9.7 billion export earnings. Apparel exports have accounted for 57 percent of export earnings of $8 billion in the first nine months of this year.
“Normally, we receive apparel orders six months ahead of time. Now we have not received the orders as they already have stocks with them and they don’t have storage facilities,” Indumini Kodikara, Export Services Director, Export Development Board (EDP), told EconomyNext.
“In the next six months, there will be a very low amount of orders.”
The world’s leading economies are sliding into recession as the global energy and inflation crises sparked by Russia’s invasion of Ukraine cut growth by more than what was previously forecasted.
The Joint Apparel Association Forum (JAAF) admitted that the industry has started to see a decline in export orders.
“We are projecting over the next two-three months we will see a drop of 25-30 percent in the order volumes”, JAFF Secretary General Yohan Lawrance told EconomyNext adding that a drop has already been experienced in October.
EDB’s Acting Director of Industrial Products Manoja Dissanayake said the country has seen a decline in some other exports as well.
Sri Lanka has so far seen over $1 billion in monthly export earnings almost throughout this year as the country depreciated the rupee currency by over 50 percent in the last eight months.
Some exporters predict a slowing down of exports from December as the government has raised tax rates. However, the government has said it had not taxed exports.
As a result of the disruption caused by Russia’s invasion of Ukraine, Sri Lanka’s traditional markets such as Europe and USA have been reducing exports amid tightening monetary policy to curb increasing inflation.
Sri Lanka is forced to push itself to look into alternate markets such as India, Russia, Taiwan, and regional countries such as Malaysia and Singapore to boost its exports with or without free trade agreements. (Colombo/Nov23/2022)