Positive start for exports in 2017; up 2% in 1Q after two years of decline

Sri Lanka’s exports, which have suffered two consecutive years of negative growth, have bounced back in the first quarter of 2017, registering a modest yet welcome 2% gain.

The Export Development Board’s Policy and Strategic Planning Division said yesterday that January-March 2017 merchandise exports amounted to $ 2.7 billion, up 2% from the same period of last year.

In the first quarter of 2016, exports were down by 5.4% to $ 2.7 billion from the corresponding period of 2015. Exports during 2015 decreased by 5.6% to $ 10.5 billion and in 2016 the decline was 2.2% to $ 10.3 billion.

EDB said as a whole, first quarter exports fared well, despite unfavourable global conditions which continued from 2016. “However, there are signs of recovery during 2017, with global positive economic forecasts available to-date,” EDB’s Policy and Strategic Planning Division said.

“The export performance of Sri Lanka remains stable compared to other the regional competitors such as Malaysia, Thailand and Singapore, where five-year export growth was negative, while Sri Lanka’s performance has been positive with a five-year average growth of 10%,” it said. 

“The export-related industries are expected to have better times ahead, as Sri Lanka has regained the EU GSP+ status and with the United Kingdom affirming that it will continue to extend this facility to Sri Lanka despite its decision to leave the EU,” EDB added.

EDB said export values of essential oils showed the highest growth of 41%, followed by Electronic/Electrical and Machinery products and parts. Spice exports showed a growth of 39% and exports of fruits, ornamental fish and seafood grew by 27%, 22% and 17% respectively.

The combined value of these sectors was $ 258 million. However, the Tea, Coconut and Rubber and Rubber-based sectors, with a combined value of $ 701 million, grew by only 7 % while the Apparel sector, the highest export revenue contributor to the economy, performed negatively, with a total value of $ 1,274 million during the period under review, a decrease of $ 90 million.

The US continued to be the leading export destination with a share of over 25%. The shares of India, Italy, Singapore, the UAE, China, the Russian Federation, Canada, Australia and Turkey increased during January-March 2017 when compared to 2016.

Tea exports increased during the first three months of the year. The main markets served were Russia and Turkey. Further increases in exports of tea can be expected in 2017 as the main markets such as the Middle East and Northern Africa (MENA) have projected a 2.4 % economic growth in the region. EDB said the World Bank expects a 1.4 % growth in the Russian market in 2017, which together with the oil price stabilisation in the region, is expected to show a positive impact on tea exports. 

On the supply side of tea, sector experts have indicated that tea production has improved since November 2016. High prices in the international market and the expected growth in the Euro Zone too will contribute towards the industry’s further growth in 2017.

The value of seafood exports increased by 18% in the first quarter of 2017, compared to same period during the previous year. During January -March 2016, the industry’s exports were affected due to the ban on fish imports from Sri Lanka into the EU. 

However, with the removal of the ban from June 2016, the industry has performed well in European markets as well as in the US. Exports to markets such as Italy, the United Kingdom and Germany resumed during the period under review. The main exports to these markets are mainly frozen and fresh fish, crabs, lobsters and prawns, all of which are exported under the category of seafood. The exports of seafood together with ornamental fish contributed around $ 70 million to the total merchandise exports of the country.

The removal of the ban on exports of fishery products to the EU was a success due to the strong lobbying of the relevant authorities such as the Ministry of Fisheries and Aquatic Resources Development, the EDB, Department of Commerce along with the relevant trade associations. Seafood exporters are expected to see increased volumes in the coming months, with the reinstatement of the EU GSP + concessions.

EDB said the exports of cloves increased significantly in 2017.The main markets are India and Saudi Arabia, while cinnamon moved to its traditional markets such as Mexico, Columbia and Peru. The spice manufacturers are closely related to the essential oil industry as well. The main essential oil products are Cinnamon leaf and bark oil, clove, nutmeg and pepper oil, which are exported to markets such as the United States, Germany, France, India, etc.

Ceylon cinnamon, the spice item which is obtained from the inner bark of the Cinnamomum zeylanicum blume tree, or famous ‘Kurundu’, is a well-known and reputed spice all over the world. The Sri Lanka Export Development Board obtained the Pure Ceylon Cinnamon (PCC) Certification Mark, which has been registered in main markets such as Europe, the US, Peru and Colombia, in addition to being registered with the World Intellectual Property Organisation (WIPO). 

The EDB is in the process of obtaining the Geographic Indication (GI) for Cinnamon in collaboration with relevant public, private stakeholders such as the National Intellectual Property Office, Department of Export Agriculture and Spice Council in order to gain a competitive advantage in the commercialisation of Ceylon cinnamon while protecting it internationally.

Products such as electronic, electrical and machinery products/parts were exported to a variety of markets such as Ghana, the UAE, Cyprus, Thailand, Germany and the United Kingdom, in smaller values. Electronics and electrical products have been identified as future potential products to expand Sri Lanka’s export basket, after extensive analysis carried out by a team of EDB officials under the guidance of Harvard Business School experts.

Under the category of Coconut and Coconut Products, items such as coconut oil, activated carbon, liquid coconut milk and coconut cream exports have been made for markets such as the US, Germany, China and Pakistan.

The export of Textiles and Garments, Food and Beverages, Gems, Diamonds and Jewellery and mineral and non -metallic products recorded a decline during the period. Apparel exporters attribute the decline in exports to the sluggish economic growth and in particular, the economic slowdown of the US - the main market for Sri Lanka’s apparel industry. Exports of apparel to the European Union and Germany also recorded reduced volumes.