Exporters less pessimistic on economic outlook despite expected revenue slowdown in 2023

• Underutilisation of capacity, which was a result of fall in export orders, expected to continue into 2023
• Higher labour attrition was recorded compared to past survey, due to migration, which could lead to a skill shortage in medium to long term
• SMEs say foreign exchange crisis hampered their ability to export, due to loss of suppliers or delays by suppliers
• However, larger firms saw a greater decline in export revenue compared to SMEs
• Likely slowdown in export growth during first half of 2023 amid persisting fall in export orders

The fourth Export Barometer Survey conducted by the Ceylon Chamber of Commerce highlighted a fall in exports in the second half of 2022, in line with the decline in national exports during the last quarter of the year. 

The survey, which covers the second half of 2022 and the outlook for the first half of 2023, revealed that the fall in export orders led to significant underutilisation of capacity within the export sector, which is expected to continue into 2023. 

The exporters stressed that the negative image of the country and domestic regulations were key challenges for them during the second half of 2022. 

The firms had to focus their attention on retaining the existing clients that were looking to move to competitor countries, due to the negative perception of the country.  

As such, the thrust of finding new buyers and venturing into new products and services was limited. 
The domestic regulations such as import restrictions and clearance delays at the port were cited as some of the domestic constraints. The most concerning factor however is related to labour, where higher labour attrition was recorded compared to the past survey, due to migration, which could lead to a skill shortage in the medium to long term.

The SMEs, who were 71 percent of the respondent firms, stated that the foreign exchange crisis hampered their ability to export, due to the loss of suppliers or delays by suppliers. They noted a sharp fall in demand for services, which is likely to slow export growth during 2023.  However, it was interesting to note that the larger firms saw a greater decline in export revenue compared to the SMEs. In terms of the outlook for 2023 and in particular the first half of 2023, the export firms are more optimistic in their views on the economy relative to six months ago.

However, their outlook on export orders remains the same, highlighting a likely slowdown in export growth during the first half of 2023. To counteract the slowdown in exports, led by the global slowdown, the Ceylon Chamber of Commerce urged that it would be important to maintain economic and political stability, continue to provide uninterrupted power supply and assist firms with market access opportunities.