Business

Exports around billion dollar mark for third straight month 

Sri Lanka’s exports during the month of August 2020 recorded a downfall of 19.2% to $ 947.7 million as compared to the value of $ 1,033.3 million recorded the same month of last year, the Export Development Board (EDB) announced.

Despite the decline in exports, some products like coconut-based products, electricals and electronic components, spices and essential oils, and food and beverages recorded a positive growth of 22.88%, 8.32%, 19.4%, and 11.45%, respectively, during the month of August 2020 as compared to August 2019.

EDB Chairman Prabhash Subasinghe said:” It is remarkable to see another month of almost a billion dollars of exports. However, we are being watchful of the months ahead whilst understanding the impact of Covid-19 on our key markets of the US and Europe. We also need to focus on export product and market diversification which is seriously lacking today. Whilst appreciating that the US and the EU are the largest markets, we need to now create a significant export market in Asia, including China. The China free trade agreement (FTA) will certainly help in this regard. Export product diversification must simultaneously happen so that we can create more billion-dollar industries for Sri Lanka.”

Graph I: Monthly export performance 2019, January-August 2020

Source: Sri Lanka Customs

Sources: Central Bank of Sri Lanka, Sri Lanka Customs, Sri Lanka Export Development Board

Export performance of major sectors in August 2020

Export earnings from apparel and textiles declined by 11.99% to $ 438.34 million during the month of August 2020 compared with $ 498.03 million recorded in August 2019. In parallel, a 6.15% decline was recorded in August 2020 in comparison to July 2020. Despite the decline in the sector, earnings from exports of made-up textiles increased by 200-fold in August 2020 in comparison to August 2019.

In addition, export earnings from rubber and rubber finished products have decreased by 2.71% year-on-year (YoY) to $ 72.53 million in August 2020, due to the bearish performance in exports of pneumatic and retreated rubber tyres and tubes, gaskets, washers, seals, etc. of hard rubber. However, exports of industrial and surgical gloves of rubber have increased by 36.19% YoY to $ 23.07 million in August 2020.

Export earnings from tea in August 2020, which made up 12% of merchandise exports, declined by 13.27% YoY to $ 102.97 million and the export volume was also declined by 16.01% in August 2020 compared to August 2019. The decline was mainly due to lower demand for tea from Iran and Iraq.

Earnings from all the major categories of coconut-based products increased in August 2020 compared with August 2019. Earnings from liquid coconut milk and coconut oil, categorised under coconut kernel products, increased by 89.15% and 114.38%, respectively. Being the largest contributor to the coconut-based sector, coco peat, fibre pith, and moulded products, which are categorised under the coconut fibre products, increased by 20.71% to $ 13.52 million in August 2020 in comparison to August 2019. Earnings from activated carbon, which is categorised under coconut shell products, increased by 7.18% in August 2020 compared to August 2019. 

Export earnings from spices and essential oils have increased significantly by 19.4% to $ 39.88 million in August 2020, compared with the value of $ 33.4 million recorded in August 2019, with a significant increase in export of cinnamon (53.55%). 

Meanwhile, earnings from the export of electrical and electronic components (EEC) increased by 8.25% to $ 32.93 million in August 2020 in comparison to August 2019. Also, earnings from the export of EEC increased by 2.39% to $ 32.93 million in August 2020 compared with July 2020. The export of switches, boards, and panels increased by 14.10% YoY to $ 4.29 million in August 2020 and the export of other EEC products increased by 19.77% YoY to $ 17.63 million in August 2020.  

Table 1: Merchandise export performance

Values in $ millions

 Exports of goodsJan-Aug

2019

Jan-Aug

2020

%

growth

Aug 2019Aug 2020%

growth

Apparel 3,724.142,842.03-23.69498.03438.33-11.99
Tea 914.99805.56-11.96118.74102.98-13.27
Rubber-based 609.87506.77-16.9174.5672.51-2.75
Coconut-based423.50421.70-0.4353.1565.3122.88
Diamond, gems, and jewellery 197.4298.70-50.0122.1313.19-40.40
Electricals and electronic components258.42209.19-19.0530.4132.948.32
Spices and essential oils204.09195.59-4.1633.4039.8819.40
Food and beverages245.86246.170.1324.9027.7511.45
Seafood184.46133.16-27.8120.4815.57-23.97
Ornamental fish10.148.45-16.671.010.63-37.62
Vegetables21.0317.26-17.932.641.72-34.85
Fruits27.0623.18-14.343.312.95-10.88
Other export crops20.3856.27176.103.236.58103.72
Flowers and foliage12.948.66-33.081.290.94-27.13
Boat building 63.751.91-97.000.140.2792.86
Petroleum products220.97227.282.8624.2721.45-11.62
Others 782.14598.33-23.50121.61104.68-13.92
Total merchandise exports7,921.166,400.21-19.201,033.30947.68-8.29

Sources:  Sri Lanka Customs, Sri Lanka Export Development Board

Export performance during the period of January-August 2020

Total export earnings from January to August 2020 was $ 6,400.21 million compared to $ 7,921.16 million recorded in a similar period of the previous year – a decline of 19.2%. This shows an improved performance compared with the decline of 21.08% recorded from January to July 2020.

Major exports such as apparel and textiles ($ 2,842.04 million), tea ($ 805.57 million), and coconut and coconut-based products ($ 421.70 million), and rubber and rubber-based products ($ 506.75 million) recorded a decrease of 23.69%, 11.96%, 0.43%, and 16.91%, respectively from January to August 2020 compared to the similar period of the previous year. Petroleum products, food and beverages, chemical and plastic products, and other export crops recorded positive growth rates during the period.

The export sectors that show a positive growth at disaggregate levels include the exports of industrial and surgical gloves of rubber, coconut oil, coconut cream, liquid coconut milk, coconut flour, coconut vinegar, coconut shell charcoal, mattress fibre, areca nuts, ginger, essential oils, made-up textile articles, processed food, and mitts and mittens (plastic products).

Earnings from the export of Personal Protective Equipment (PPE)-related products increased by 38.32% to $ 541.94 million from January to August 2020, compared with the value of $ 391.79 million recorded in the corresponding period of the previous year. The strong performance was mainly due to the increased exports of other made-up articles (HS code 630790) and articles of apparel and clothing accessories of plastics (HS code 392620).

Sri Lanka’s trade performance in major markets

 The top five export destinations during the period from January to August 2020 were the US ($ 1,652.17 million), the UK ($ 552.46 million), India ($ 396.96 million), Germany ($ 371.05 million), and Italy ($ 280.51 million) absorbed over 50% of exports recorded in the period. 

Being the largest single export destination, the US has absorbed $ 248.63 million worth of exports in August 2020 recording a decline of 11.2% in comparison to $ 280 million absorbed in August 2019. Also, exports to the US decreased by 20.69% from January to August 2020 in comparison to the same period in 2019.

Exports to the UK as the largest trading partner in the EU region recorded an increase of 8.69% to $ 90.76 million in August 2020 compared with August 2019. 

Further, exports to Italy, Canada, China, Japan, and Turkey have also shown better performance during the month of August 2020. Exports to China grew significantly by 34.47% in August 2020 led by earnings from the export of apparel, tea in bulk, and activated carbon.

Table 2: Sri Lanka’s top export destinations

Values in $ millions

CountryJan.- Aug

2019

Jan.- Aug

2020

%

Growth

Aug 2019Aug 2020%

Growth

The US2,083.251,652.17-20.69280.00248.63-11.20
The UK694.17552.46-20.4183.5090.768.69
India517.72396.96-23.3364.0057.57-10.05
Germany440.92371.05-15.8558.6358.48-0.26
Italy353.08280.51-20.5544.7547.045.12
Belgium233.91183.27-21.6537.2826.51-28.89
The Netherlands193.21172.47-10.7325.7425.48-1.01
The UAE184.70127.88-30.7620.0214.67-26.72
Canada162.55132.93-18.2220.9223.3611.66
China154.88138.73-10.4317.9024.0734.47
Japan214.27127.52-40.4915.7917.5611.21
Turkey141.93131.61-7.2720.6622.358.18
Other markets2,546.572,132.65-16.25344.11291.20-15.38
Total 7,921.166,400.21-19.201,033.30947.68-8.29

Sources:  Sri Lanka Customs, Sri Lanka Export Development Board

Export of services

The services exports estimated by EDB, which includes ICT (information and communication technology)/BPM (business process management), construction, financial services, and transport and logistics show exports of $ 2,224.02 million for the period from January to August 2020 compared to $ 2,584.67 million recorded in the corresponding period of the previous year. However, estimated service exports declined by 13.95% during the period from January to August 2020 compared with the corresponding period of the previous year.