Merchandise exports flirt with US $ 10bn surpassing target

• 2020 export earnings at US $ 9.9bn, surpassing US $ 9.5bn revised target
• “…notable rebound amidst the outbreak of COVID-19,” says EDB Chairman 
• Dec. export earnings at US $ 932mn, down 7% YoY but up 14% from Nov.
• CB estimates a US $ 2bn decline in trade deficit in 2020, compared to 2019
• Services export earnings for 2020 estimated at US $ 2.9bn, compared to US $ 3.8bn in 2019

Sri Lanka has recorded an income of US $ 9.9 billion from merchandise exports in 2020, surpassing the US $ 9.5 billion new target set in the middle of the year, after the pandemic crippled trade flows, forcing the authorities to revise down the US $ 13.5 billion target set at the beginning of the year. 

According to the data compiled by the Export Development Board (EDB), Sri Lanka’s December exports fared well, recording US $ 932 million, up 14 percent from the November figure, albeit down 7.0 percent from the same month in 2019. 

EDB Chairman Suresh De Mel called the performance a “notable rebound amidst the outbreak of COVID-19”.
Among the key categories that contributed to the December performance were textiles and garments, which recorded US $ 450 million, down 6.5 percent from a year ago, while tea export earnings rose 6.8 percent to US $ 113 million.

For the full year, the two commodities recorded export earnings of US $ 4.4 billion and US $ 1.2 billion, each logging a decline of 21 percent and 8 percent, respectively. 

“Despite the decline in the sector, earnings from exports of made-up textile articles and other textiles increased by 64.79 percent and 11.72 percent, respectively, in December 2020, in comparison to December 2019. 

However, exports of apparel increased by 46.58 percent in December 2020, compared with November 2020,” an EDB statement said.

“Earnings from export of PPE (personal protective equipment)-related products increased by 47.42 percent to US $ 876.44 million in January to December 2020, compared with the value of US $ 600.45 million recorded in the corresponding period of previous year,” it added, as PPE grew in demand in place of regular apparels, due to the pandemic. 

Early this week, the Central Bank said the country’s 2020 merchandise export earnings were projected to have surpassed US $ 10 billion and the imports to have fallen to less than US $ 16 billion, resulting in a US $ 2.0 billion decline in the trade deficit in 2020, compared to 2019.   

This is in comparison to the US $ 11.9 billion merchandise exports and US $ 19.9 billion in merchandise imports recorded in 2019.  The full breakdown of individual performance of both export and import commodities is few weeks away, as the final data is issued by the Central Bank.

While the trade account of the external account emerged unscathed and even better in a year ravaged by a pandemic, the services inflows declined due to lack of tourism inflows, as the country closed its borders mid-March 2020. 

While the remittance income remained a bright spot, the tourism and other services inflows such as from information technology and business and knowledge processing outsourcing services, had a bad patch. 

“The services exports estimated by the EDB, which includes ICT/BPM, construction, financial services and transport and logistics, show exports of US $ 2,976 million for the period of January to December 2020, compared to US $ 3,888 million recorded in the corresponding period of the previous year, which shows a decline of 23.46 percent,” the EDB statement said.

The income from tourism was limited to US $ 956 million in 2020, compared to US $ 4.4 billion in 2018, as the Easter attacks had a bearing on the trade in the following year. 

The Central Bank hasn’t gone public with an earnings target from tourism in 2021 and said an earnings forecast for the industry would be published in its annual report come April. Sri Lanka is opening its borders for tourists from today with relaxed health protocols.