Exports start 2022 with growth

Sri Lanka’s export sector has begun 2022 on a positive note year-on-year (YoY), though merchandise shipments were down month-on-month as per latest data released by the EDB recently.

Merchandise exports in January were up 13.4% to $ 1.06 billion YoY, though it was down by $ 63 million from December. Latest performance is also higher than $ 1 billion achieved in January 2020.

Export Development Board estimated services exports in January at $ 313.22 million, up by 7% from a year earlier.

“Exports performance in January 2022 has been remarkable and the growth has been all encompassing, as almost all the major sectors have exhibited encouraging trends. We are hopeful that this trend will continue, and we can see a strong recovery through the end of the year,” EDB Chairman Suresh de Mel said.

In 2021, Sri Lanka’s exports recorded $ 15.12 billion, up by 23% from 2020 sustaining its resilience, despite an unprecedented economic crisis. The year 2021 performance comes second only to $ 15.91 billion recorded in 2018.

The Government is banking on exports, the only hope that can pull Sri Lanka out of the vicious cycle of the current account and put it back on a sound economic growth path.

The Government has assured more support to exporters to reach a $ 20 billion target this year. Commending the exporters, he emphasised on the need to add more value to exports, explore niche markets, and diversify product basket and markets.

“Whilst appreciating that the US and the EU are the largest markets, we need to expand our market share in Asia.

The proposed Preferential Trade Agreement (PTA) with Bangladesh will certainly help in this regard.

Export product diversification should simultaneously happen to create more billion-dollar industries in Sri Lanka,” de Mel pointed out.

The estimated value of services exports for January was $ 313.22 million, up by 42.2 % over the corresponding month of 2021.

The services exports estimated by EDB consist of ICT/BPM, Construction, Financial services and Transport and Logistics. Major exports in January Export earnings from apparel and textile exports have increased by 22.1 % YoY to $ 514.41 million in January with strong performance in exports of apparel (24.25%) and woven fabrics (50.24%).

However, made-up textile articles declined by 28.68% compared to a year earlier. Earnings from rubber and rubber finished products have increased by 3.52 % YoY to $ 87.12 million in January, with positive performance in exports of pneumatic & retreated rubber tyres and tubes (4.08%) and industrial and surgical gloves (2.62%).

Coconut-based export earnings were up by 26% to $ 68.28 million in January. On a monthly analysis, export earnings of kernel products, fibre products and shell products categorised under the Coconut based increased by 40.7%, 18.97% and 26.01% respectively.

Export earnings from coconut oil, desiccated coconut, coconut milk powder, coconut cream and liquid coconut milk categorised under the coconut kernel products increased by 31.75%, 75.92%, 19.82%, 52.19% and 33.26% respectively in January.

Being the largest contributor to Coconut based sector, coco peat, fibre pith and moulded products which are categorised under the coconut fibre products, increased by 27.83% to $ 15.11 million in January 2022 from a year earlier.

Earnings from activated carbon, which is categorised under the coconut shell products increased by 2% to $ 11.23 million YoY. Export earnings from tea, which made up 12% of merchandise exports, however fell by 9.67% YoY to $ 91.22 million in January 2022, whilst it was down by 8.5 % compared to January 2020.

Despite the export of tea packets increasing marginally by 2.25% in January 2022 compared to corresponding period in 2021, the bulk tea exports declined by 20.06% in January 2022.

Earnings from the electrical and electronics components increased by 12.62% YoY to $ 35.87 million in January 2022 with strong performance in exports of Insulated wires and cables (40.08%), switches, boards and panels (11.42%) and electrical transformers (72.22%).

Export earnings from seafood increased by 42.66% to $ 24.11 million in January 2022 compared to January 2021. This increase was mainly due to the increase in earnings from export of frozen fish (53.82%), fresh fish (117.33%) and shrimps (33.2%).

Further, export earnings from ornamental fish increased by 45.61% to S$ 1.78 million in YoY. However, export earnings from spices and essential oils decreased by 17.12% to $ 34.99 million YoY, due to the poor performance in cinnamon (-15.18%) and cloves (-70.78%). Despite the decline in the sector, earnings from pepper increased by 13.39% in January 2022 compared to January 2021. Export performance in major markets Strong export performance was recorded for the major export markets which accounted for 65% of total merchandise exports during the period January 2022.

Eight markets out of the top 10 markets recorded positive performance except Italy and China. During the month of January 2022, exports to the US – Sri Lanka’s single largest export destination, increased by 26.43 % to $ 295.25 million compared to January 2021. The better performance was led by an increase in exports of apparel and textile (31.6%), rubber-based products (pneumatic and retreated rubber tyres and tubes (14.43%) and cinnamon (49.6%).

Exports to the UK as the second largest trading partner recorded an increase of 31.99 % to $ 81.16 million in January 2022 compared to a year earlier. This performance has resulted in the increased exports recorded in apparel and textile (42.8%) and pneumatic and retreated rubber tyres and tubes (26.32%).

Exports to FTA partners Exports to Free Trade Agreement (FTA) partners in January 2022 accounted for 7.2% of total merchandise exports, up by 28 % to $ 80.31 million. In addition, exports to India and Pakistan increased by 28.9% and 21% YoY to $ 71.72 million and $ 8.59 million respectively in January 2022.

Increased Exports to India is mainly supported by increased exports of animal feed (11%), pepper (17.86%), woven fabrics (26.5%) and apparel (65.51%) in January 2022. Better performance recorded in Pakistan was led by desiccated coconut, other articles of stones, woven fabrics and perfumes, cosmetics, shampoos and makeup preparations and other electrical and electronic products. Export performance in regions Sri Lanka’s exports to all regions increased during the month of January 2022 compared to January 2021.

Exports to the European Union (EU) which comprise 20% of Sri Lanka’s exports during the month of January 2022 increased by 1.33 % YoY to $ 206.74 million. Breakdown of exports to the top five EU markets which accounted for 80% of Sri Lanka’s total exports to the EU were; Germany $ 60.2 million (up by 12.63%), Italy $ 49.69 million (down by 6.32%), Netherlands $ 38.68 million (up by 10.96 %), Belgium $ 24.78 million (up by 4.56%) and France $ 23.51 million (up by 12.65%).