Sri Lanka’s apparel industry is facing a decline in demand during the first quarter of the year, with industry leaders warning that the downturn could worsen and result in a significant drop of around 20 per cent by year-end.
Joint Apparel Association Forum (JAAF) Secretary General and Spokesman Yohan Lawrence told the Sunday Times Business that the industry’s primary concern at present is the decline in demand, as Sri Lanka is becoming less competitive compared to other regional counterparts.
According to Lawrence, the industry recorded a 10-11 per cent drop in demand from January to March, and the situation is expected to deteriorate further in the coming months.
“By the end of the year, there could be a significant drop in demand of around 15-20 per cent,” he said.
He noted that the impact of the West Asia war is being strongly felt and is expected to intensify due to rising manufacturing costs, particularly as energy expenses continue to increase.
With fuel prices climbing, markets have become more sensitive to spending, and customers are reportedly being more cautious when making new purchases, Lawrence explained.
He further pointed out that rising costs, especially energy-related expenses, are creating a knock-on effect across the apparel sector.
Lawrence highlighted that competing countries such as Cambodia, where energy prices have not increased, are not facing similar pressures on their apparel industries or manufacturing costs.
As a result, Sri Lanka is in a difficult position as it is forced to compete with these countries while maintaining competitive pricing.
He also stated that Sri Lanka is “back peddling our renewable energy” and has failed to implement power wheeling and own power arrangements that have been adopted by other countries.
In this context, Lawrence stressed that Sri Lanka must develop mechanisms to reduce the impact of shocks caused by the West Asian conflict.
Meanwhile, the industry has held discussions with the Ministry of Industries regarding changes to tariffs imposed by the United States after July.
According to Lawrence, the government has informed the industry that it continues to engage with relevant US authorities on the matter. However, the industry remains dissatisfied with the progress made so far.
