EDB says 2020 export target in quandary due to coronavirus

• Says achieving US$ 18.5bn export target set for the year difficult
• Virus to affect SL’ top two export markets-USA and EU
• Seafood exports to decline 25% next quarter owing to virus outbreak in Italy

The Export Development Board (EDB) yesterday said due to the effects felt by the supply chains of Sri Lanka’s key export sectors from coronavirus (COVID-19), achieving the US$ 18.5 billion export target set for this year is in quandary. 

“The export target of US$ 18.5 billion set for 2020 will be difficult to achieve,” EDB Chairman Prabhash Subasinghe said.

He said consumption in Sri Lanka’s two top export markets, USA and European Union is likely to decline with the exacerbation of coronavirus threat, hampering the demand for imported goods.

Subasinghe predicted a 25 percent drop in merchandise exports during the second quarter due to the outbreak, which amounts to US$ 750 million.

Sri Lanka recorded an export income of US$ 16.14 billion in 2019.

Explaining the constraints faced by the supply chains of export industries, Subasinghe pointed out that a wide range of imports, including fabric, cotton, machinery and appliances, iron, steel, and plastics, etc. are likely to be affected due to shipment delays as a result of factory closures and transport restrictions in China. 

Sri Lanka’s top five export industries – apparel, tea, rubber, coconut and processed food – are facing setbacks due to this global epidemic. “As informed by apparel industrialists, their supply chain is hampered due to slowdown of fabric, accessories production in China and many shipping lines avoiding ports in China. Sri Lankan factories have started to reduce work times and are contemplating shutting down their production facilities until China resumes operations. 

“Currently most manufacturers are in search of other sources of raw materials supplies and accessories, but such sources, including even India, are not price competitive”, he added illustrating the consequences felt by the country’s largest export earner.  

EDB Chief further stated that tea importing countries such as China, Hong Kong, and Korea, had slowed down on their purchases while predicting that the shipments to Iran – the fourth largest market of Ceylon Tea in 2019 – could also be affected due to the spread of the virus.  

“China is a major market for Sri Lankan coconut fibre. Due to the outbreak, Chinese factories have reduced their production of value- added products, and Sri Lankan fibre millers are holding heavy stocks.  If this situation remains, it is likely to burden the fibre millers further and deprive thousands of people of employment,” he said. 

Subasinghe also foresaw difficult times ahead for the tyre industry, as major raw materials of the tyre industry such as chemicals, nylon cords, moulds, tyre building and other accessories are mostly sourced from China.

Meanwhile, seafood exports had declined by 35 percent by last week and it is expected to drop by 25 percent over the next quarter owing to the outbreak of the virus in Italy, which is Sri Lanka’s largest market for seafood in Europe. 

“Other export sectors such as food & beverages, boat & ship building, pharmaceutical, gems & jewellery, electronic & electrical products, printing, ICT/BPM and the logistic sector are also badly affected,” Subasinghe lamented.