ECONOMYNEXT – Sri Lanka exporters are on the lookout for diversified markets as a pending global recession may trigger a drop in sales in Europe and Western countries, officials and industry leaders said.
The Sri Lanka Export Development Board (SLEDB), the country’s export overseer, said a significant decline in the order volumes in all the exporting sectors has been observed.
“All orders are dropping due to the recession,” SLEDB, Director of Policy and Strategic Planning, Kumudinie Mudalige told Economynext.
“All sectors, mainly, apparels, and coconuts, have informed us that their order books are not full in comparison to other years.”
Industry leaders in apparel, rubber and coconut industries told EconomyNext that sales are slowing down, and the country should explore other markets to secure more exports.
“In the last few months, we saw a decline in apparel exports due to the impact of a pending global recession, overstocking of goods in customer warehouses and the fallout of the war in Ukraine,” Joint Apparel Association Forum (JAAF) Secretary General, Yohan Lawrence said.
“The forward order book is similarly showing lower volumes and we expect Q1 2023 to be around 20 percent less than the same period last year.”
The industry in 2022 ended up with exports of 5.5 billion US dollars, an increase of nearly 10 percent from a year ago. However, in the last four months, it has fallen to an average of 430 million US dollars per month from 500 million.
With interest rates increasing, the purchasing ability of customers in these markets have gone down, resulting a drop in demand which affects exports.
“This would be over and above measures taken to protect our existing markets in the USA, the EU, and the UK,” Lawrence said, adding that JAAF has identified five markets are showing potential including Canada, India, China, Australia, and Japan.
“We welcome the FTA negotiations with China and India and would request that the authorities also look at the other countries we mentioned,” he said.
“Joining with other markets will give us the ability to compete on even terms with those countries.”
He added that Canada should be looked at separately.
“The UK is heading for a recession next year and it is one of our key markets.,” Director General of the Sri Lanka Association for Manufacturers and Exporters of Rubber Products (SLAMERP), Rohan Masakorala said.
“The US may not go into a recession, but it may slowdown.
“We have to slowly look at more diversified markets to get into, rather than sticking to our two main export markets.”
The SLEDB Development Board said the government has identified this issue and is making attempts to explore markets such as China, India, and Thailand. (Colombo/ Feb 07/2023)