Sri Lanka's exports declined in October amid second wave of pandemic

As per the Customs statistics, earnings from merchandise exports recorded a negative growth of 14.9% in October 2020 to US$ 831.72 million as compared to the value of US$ 977.3 million recorded in October 2019. This poor performance is due to the adverse impact of 2nd wave of Covid-19 pandemic within the country and globally.

Export Development Board (EDB) Chairman Prabhash Subasinghe said, “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. 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.”

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

Export Performance of Major Sectors in October 2020

Export earnings from Apparel & Textiles declined by 18.93 % to US$ 356.52 Mn during the month of October 2020 compared with US$ 439.79 Mn recorded in October 2019. In parallel, 17.45 % 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% in October 2020 in comparison to October 2019.

Export earnings from tea in September 2020 which made up 12% of merchandise exports decreased by 1.38 % y-o-y to US$ 112.22 Mn and the export volume was also decreased by 10.57 % in October 2020 compared to October 2019. In addition, export earnings from tea recorded 1.55 % increase in 2020 in October 2020 in comparison to September 2020.

In addition, Export earnings from Rubber & Rubber finished products have increased by 12.4 % y-o-y to US$ 80.3 Mn in October 2020 due to the better performance in exports of Pneumatic & Retreated Rubber Tyres & Tubes (8.49%) and Industrial & Surgical Gloves of Rubber (36.27%). However, exports of Rubber Plates, Sheets Rods of Vulcanized or Unhardened Rubber, Gaskets, Washers, Seals etc. of Hard Rubber and Hygienic or Pharmaceutical Articles have decreased by 39.93 %, 10.04% & 65.71% 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 categorized under the Coconut Kernel Products increased by 70.46%, 41.67%, 72.64% and 208.7% respectively in October 2020 compared with October 2019. Being the largest contributor to Coconut based sector, Coco Peat, Fiber Pith & Moulded products which categorized under the Coconut fibre products increased by 30.64 % to US$ 13.09 Mn in October 2020 in comparison to October 2019. Earnings from Activated Carbon, which categorised under the Coconut shell products increased by 17.61 % in October 2020 compared to October 2019.

Export earnings from Spices and Essential Oils have increased by 3.71% to US$ 33.8 Mn in October 2020 compared with the value of US$ 32.59 Mn recorded in October 2019 due to the better performance recorded in exports of cinnamon (10.16%).

Meanwhile, earnings from export of Electrical and Electronic Components (EEC) decreased by 37.51% to US$ 20.49 Mn in October 2020 in comparison to October 2019. Also, earnings from export of EEC decreased by 44.64% in October 2020 compared with September 2020. Despite the decline in the sector, Export of Printed Circuits recorded an increase of 4.17% in October 2020 compared to October 2019.

Export Performance during the period of January – October 2020

Total merchandize export earnings for January to October 2020 was US$ 8,233.21 Mn compared to US $ 9,849.17 Mn recorded in a similar period of the previous year – a decline of 16.41 %.

Major exports such as Apparel & Textiles (US$ 3,630.41 Mn), Tea (US$ 1,031.78 Mn), Rubber & Rubber based products (US$ 667.14 Mn) and Electrical & Electronic Components (US$ 266.71 Mn) recorded decrease of 21.29%, 9.42%, 11.49% and 17.64% respectively during January - October 2020 compared to the similar period of previous year.

However, export of Coconut & Coconut Based Products (US$ 552.74 Mn), Spices and Concentrates (US$ 268.33 Mn) and Other Export crops (US$ 63.77 Mn) recorded positive growth rates during the period.

The export sectors that shows a positive growth at disaggregate level includes export of Made-up Textile Articles, Other Textile Articles, Industrial & Surgical Gloves of Rubber, Coconut Oil, Coconut Milk Powder, Coconut cream, Liquid Coconut Milk, Coconut Flour, Coconut Vinegar, Coco Peat, Fiber Pith & Moulded products, Coconut husk chips, Activated Carbon, Coconut Shell Pieces, Powder & Charcoal, Cinnamon, Essential oils, Ginger, Processed Vegetables, Fruits & Juices, Sugars, Sugar Confectionery & Bakery Products, Rice, Black Gram, Lentils, Betel leaves, Arecanuts, Starches, Glues, Enzymes, Gloves, Mitts & Mittens (Plastic Products), Natural Salt and Petroleum Gases.

Earnings from export of PPE (Personal Protective Equipment) related products increased by 46 % to US$ 731.63 Mn in January to October 2020 compared with the value of US$ 501.13 Mn 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).

Sri Lanka’s Trade Performance in Major Markets

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

Being the largest single export destination, United States of America has absorbed US$ 197.06 Mn worth of exports in October 2020 recording a decline of 17.88 % in comparison to US$ 252.16 Mn absorbed in October 2019. Also, exports to United States of America decreased by 19.32 % 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% to US$ 102.52 Mn 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.

Except EU Region (6.45%), exports to other regions; South Asia, Asean, CIS, African and Middle East Countries have decreased 30.08%, 21.44%, 27.01%, 7% and 39.13% respectively in October 2020 compared with October 2019.

Export of Services

The services exports estimated by EDB which includes ICT/BPM, Construction, Financial services and Transport & Logistics show exports of US $ 2,577 Mn for the period of January to October 2020 compared to US$ 3,208 Mn recorded in the corresponding period of the previous year. However, estimated service exports declined by 19.66 % during the period of January to October 2020 compared with the corresponding period of previous year.

Revised Export Target & Achievement

The revised export target of the Export Development Board for 2020 is US$ 13.39 billion and of that we expect 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% achieved from the revised export target.

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