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Export growth to slow down amid recession

13 Nov 2022

  • EDB attributes slump to intensifying global recession
  • Apparel sector most vulnerable amid demand drop
The export growth observed by Sri Lanka in 2022 is expected to slow down over the coming months as the intensifying global recession impacts consumer demand in the West. Speaking to The Sunday Morning Business, Export Development Board (EDB) Chairman Suresh de Mel stated that during the first 10 months of 2022, Sri Lankan exporters had performed beyond the expectations of the EDB and they were hopeful that the positive performance would continue in the coming months.  However, he cautioned that the coming months would be incredibly volatile for the export sector due to the uncertainty created by the global recession and expressed regret that, despite making all the right moves amidst an economic crisis, the export sector would be adversely impacted by the global recession through no fault of its own. “In the coming months, we will have to diversify and find new markets, because our dominant markets are Europe and the US. However, this will not be easy because it takes time to establish relationships. We depend largely on apparel exports, which is most vulnerable in a situation like this because the global market for apparel is going to be down due to low consumer demand,” said de Mel. Speaking to The Sunday Morning Business, Joint Apparel Association Forum (JAAF) Secretary General Yohan Lawrence stated that they had observed a decrease in volumes due to the slowing down of the economies in their target markets amidst high inflation and recessionary fears. Therefore, he stated that they no longer expected to achieve their export target of $ 6 billion for 2022. Elaborating further, he stated: “As of end-September, the total revenue from apparel exports was $ 4.3 billion, which is up significantly Year-on-Year (YoY) compared to the equivalent period in 2021. However, while our apparel export revenue is still higher than 2021, the YoY increase has constricted significantly during the past couple of months. For example, in September export revenue was only 5% more than the 2021 figures.” Meanwhile, the International Monetary Fund (IMF) has revised its global growth forecast for 2022 down by 0.2 points to 2.7%, stating: “The 2023 slowdown will be broad-based, with countries accounting for about one-third of the global economy poised to contract this year or next. The three largest economies – the US, China, and the euro area – will continue to stall. Overall, this year’s shocks will re-open economic wounds that were only partially healed post-pandemic. In short, the worst is yet to come and, for many people, 2023 will feel like a recession.” – By Shenal Fernando   


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