COVID-19 second wave stalls export run

Prabhash Subasinghe 

• October merchandise exports fall 15% to US$ 831mn
• Increases in exports recorded only in European region
• EDB says exporters’ order book full for rest of year
• Jan-Oct merchandise exports down 16% to US$ 8.2mn

Earnings from merchandise exports fell 14.9 percent in October to US$ 831.72 million compared to US$ 977. 3 million in October 2019 due to adverse impact of the second wave of COVID-19 pandemic that began in 
early October. 

“It is concerning to see a sharp reduction in exports in October due to the C19 eruption in Sri Lanka which has had a direct impact on our manufacturing and export facilities. The exporters’ order book is full for the rest of the year and the businesses need to be agile to manage through the C19 disruption,” Export Development Board (EDB) Chairman Prabhash Subasinghe said. “European markets have moved into a lockdown phase and the USA has also reported very high C19 numbers, this will have a significant impact on our market access. Our exporters will need to navigate this uncharted territory in order to maintain business continuity,” 
he added.

Increases in exports were recorded only in the Europe region (6.45 percent) in October 2020 compared to October 2019. Moreover, earnings from merchandise exports absorbed by United Kingdom in October 2020 increased by 38.93 percent compared with the value recorded in October 2019.

Export earnings from apparel & textiles declined by 18.93 percent to US$ 356.52 million during the month of October 2020 compared with US$ 439.79 million recorded in October 2019. In parallel, 17.45 percent decline recorded in October 2020 in comparison to September 2020. Despite the decline in the sector, earnings from exports of other textiles increased by 43.92 percent in October 2020 in comparison to 
October 2019.

Export earnings from tea in September 2020 which made up 12 percent of merchandise exports decreased by 1.38 percent to US$ 112.22 million and the export volume was also decreased by 10.57 percent in October 2020 compared to October 2019. However, export earnings from tea recorded 1.55 percent increase in October 2020 in comparison to September 2020. 

In addition, export earnings from rubber & rubber finished products have increased by 12.4 percent to US$ 80.3 million in October 2020 due to the better performance in exports of pneumatic & retreated rubber tyres & tubes (8.49 percent) and industrial & surgical gloves of rubber (36.27 percent). 

However, exports of rubber plates, sheet rods of vulcanised or unhardened rubber, gaskets, washers, seals etc. of hard rubber and hygienic or pharmaceutical articles have decreased by 39.93 percent, 10.04 percent and 65.71 percent respectively in October 2020 in comparison to October 2019.

Earnings from all the major categories of coconut based products increased in October 2020 compared with October 2019. Earnings from coconut oil, coconut milk powder, coconut cream, liquid coconut Milk, and coconut flour categorised under the coconut kernel products increased by 70.46 percent, 41.67 percent, 72.64 percent and 208.7 percent respectively in October 2020 compared with October 2019.

Being the largest contributor to coconut based sector, coco peat, fiberpith & moulded products which categorised under the coconut fibre products increased by 30.64 percent to US$ 13.09 million in October 2020 in comparison to October 2019. 

Earnings from activated carbon, which categorised under the coconut shell products increased by 17.61 percent in October 2020 compared to October 2019. 

Export earnings from spices and essential oils have increased by 3.71 percent to US$ 33.8 million in October 2020 compared with the value of US$ 32.59 million recorded in October 2019 due to the better performance recorded in exports of cinnamon 
(10.16 percent). 

Meanwhile, earnings from export of electrical and electronic components (EEC) decreased by 37.51 percent to US$ 20.49 million in October 2020 in comparison to October 2019. 

Also, earnings from export of EEC decreased by 44.64 percent in October 2020 compared with September 2020. Despite the decline in the sector, export of printed circuits recorded an increase of 4.17 percent in October 2020 compared to October 2019.

Meanwhile, total merchandise export earnings for January to October 2020 was US$ 8,233.21 million compared to US$ 9,849.17 million recorded in a similar period of the previous year – a decline of 16.41 percent. 

Major exports such as apparel & textiles (US$ 3,630.41 million), tea (US$ 1,031.78 million), rubber & rubber based products (US$ 667.14 million) and electrical & electronic components (US$ 266.71 million) recorded decrease of 21.29 percent, 9.42 percent, 11.49 percent and 17.64 percent respectively during January - October 2020 compared to the similar period of the previous year. 

Earnings from export of PPE (personal protective equipment) related products increased by 46 percent to US$ 731.63 million in January to October 2020 compared with the value of US$ 501.13 million recorded in the corresponding period of previous year.

The strong performance was mainly due to the increased exports of other made-up articles (HS 630790) and articles of apparel and clothing accessories of plastics (HS 392620).

The top five export destinations during the period January-October 2020 were United States of America (US$ 2,089.2 million), United Kingdom (US$ 766.72 million) India (US$ 498.79 million), Germany (US$ 478.96 million) and Italy (US$ 371.58 million) absorbed over 50 percent of exports recorded during the period.

Being the largest single export destination, United States of America has absorbed US$ 197.06 million worth of exports in October 2020 recording a decline of 17.88 percent in comparison to US$ 252.16 million absorbed in October 2019. Also, exports to United States of America decreased by 19.32  percent in January-October 2020 in comparison to October 2019.

Exports to United Kingdom as the largest trading partner in the EU region recorded an increase of 38.93 percent to US$ 102.52 million in October 2020 compared with October 2019. 

Further, exports to Netherlands, Canada, China, Turkey and Russia have also shown better performance during the month of October 2020.

Meanwhile, the services exports estimated by EDB which includes ICT/BPM, construction, financial services and transport & logistics show exports of US$ 2,577 million for the period of January to October 2020 compared to US$ 3,208 million recorded in the corresponding period of the previous year. 

The revised export target of EDB for 2020 is US$ 13.39 billion, and of the export promotion agency expects US$ 9.57 billion from merchandise exports and US$ 3.82 billion from services exports. 

During the period January to October 2020, earnings from exports recorded US$ 10.81 billion including the estimated services data for July to October and 80.75 percent achieved from the revised export target.

Further, earnings from merchandise exports and services exports achieved 86.02 percent and 67.53 percent respectively during the period of January to October 2020.