Sri Lanka’s apparel export earnings could slump by $1 billion this year, a top industry expert said on Wednesday, as slowing global demand hits the crisis-hit South Asian country.
Apparel is Sri Lanka’s largest industrial export and earned $5.95 billion in 2022, helping the country as it weathered its worst financial crisis since independence in 1948, triggered by a record reduction in foreign exchange reserves.
But the industry’s first-quarter performance in 2023 has struggled with textiles and garment exports dropping 13.8% to $1.3 billion, data from Sri Lanka’s central bank showed.
Exports in March marked the lowest in three years, said Yohan Lawrence, Secretary General of the Joint Apparel Association Forum (JAAF), which is the industry’s apex body.
“Given the slowdown in demand we are seeing now, a $1 billion reduction in exports this year is not unreasonable,” he told Reuters.
“Our projection is it could be five to six more months before we see a recovery in global demand.”
Shipments to the Unites States, the country’s biggest buyer, dropped by 22% to $470 million in the first quarter.
Exports to the European Union fell 13% to $344 million while first-quarter exports to the United Kingdom were down 10% to $167.7 million, according to the latest JAAF data.
A steep 66% power tariff hike in February has also hit Sri Lanka’s competitiveness, Lawrence added.
However, the industry is not expecting significant job losses from the downturn but small and medium companies could see difficulties as the sector adapts to deal with a slowdown in orders.
The island’s apparel sector has about 300,000 employees, most of whom are women.