23 December 2022 10:03 am Views - 202
By Shabiya Ali Ahlam
The outlook for Sri Lanka’s export sector in the first quarter of 2023 doesn’t appear encouraging, the Export Development Board (EDB) said, as global economic conditions are expected to be grim in the upcoming year.
With the Western markets being hit, largely due to the issues and challenges stemming from the Russia- Ukraine war and the China – US trade disruption, their capacity to continue with exports as they did in the past will be impacted, according to EDB Chairman Suresh De Mel.
“We are already feeling it. Due to the global economic downturn, we are seeing our biggest markets, which are the European countries, where over 50 percent of our exports go to, struggle. We are hoping to have solutions to help increase our exports amidst the challenges. But, the outlook is not very good for first quarter of 2023,” De Mel told Mirror Business.
Sri Lanka’s main industrial export, textile and apparels, are already feeling the pull back in demand, as such exports during October fell 13 percent to US$ 442 million and the declining trend in such exports is expected to continue amid recession fears in Europe and the United States.
The International Monetary Fund (IMF) in its annual economic outlook released in October pointed out that 2023 is likely to be as disappointing as 2022. The agency said high inflation and central bank monetary tightening, Russia’s invasion of Ukraine, and the continued effects of Covid-19—specially in China—will hamper global growth in 2023.
Further, as Sri Lanka is yet to diversify its exports basket, the local export sector is already witnessing a drop in trade volumes over the last three months due to the challenges in the global economy, which appear to be intensifying.
As a result, the EDB chief said the agency is still in the middle of analysing the impact of global developments on the local export sector, and a revenue target for the year 2023 is yet to be finalised. “It is still not clear to us. We are still studying and exploring our options. We are looking at a lot of non-traditional markets and non-traditional products. So, we are yet to finalise a year-end target for 2023.”
According to the latest available data, which is for October, the month saw merchandise export income contracting by 8 percent Year-on-Year (YoY) to little over one billion US dollars. However, exports for the first ten months of the year ending October saw exports increasing by 9 percent to US$ 11 billion when compared with the corresponding period of the previous year.