• Unlocking export potential could create over 142,000 jobs
• Asia is key, with China and India as major targets
• Significant opportunities in machinery, equipment exports
• Improved trade diplomacy essential for maximising exports

Sri Lanka’s untapped export potential is about $ 10 billion annually while tapping this potential could create over 142,000 additional jobs, according to the World Bank.

According to the Sri Lanka Development Update for October released on Thursday (10), the export performance in the post-conflict decade (2010-’19) was below potential in Sri Lanka. 

The World Bank said that Sri Lanka’s ‘missing’ merchandise exports stood at $ 10 billion. Given the nation’s observable characteristics (economic size, level of development, remoteness, and factor endowments) potential exports are estimated at about $ 20.1 billion (about twice the current level).

The bank said that at the destination level, the largest portion of untapped export potential lay in Asia.

In 2020, 70% of missing exports for Sri Lanka were accounted for by five destinations: China ($ 3.5 billion), India ($ 1.5 billion), Japan ($ 1 billion), Indonesia ($ 0.7 billion), and South Korea ($ 0.5 billion). 

“This points to a lack of active trade diplomacy in the region,” the bank added.

World Bank estimates suggest that the missing exports are mostly in manufacturing, particularly in machinery and equipment, and to a lesser extent in minerals, metals, and chemicals. 

It added that clothing exports were substantially above potential, consistent with the historic pattern of specialisation of the economy.

Furthermore, the World Bank said that the export sector in Sri Lanka could potentially create an additional 142,500 jobs if export potential was tapped into.

Of these, 19,000 jobs could be created in agriculture exports and 123,500 in manufacturing exports, according to the bank.

“While some of these jobs could be newly created, others may involve the reallocation of labour from lower productivity, domestic-oriented firms to higher productivity, export-oriented firms,” the report said.