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Reflecting lower global demand and rising inflation, earnings from exports declined further for the second consecutive month as February merchandise shipments were down by 8.06% year-on-year to $ 1 billion, the Export Development Board said yesterday.
Although Sri Lanka’s export sector began 2023 on a negative note, earnings however managed to surpass the $ 1 billion mark.
Despite the earnings dip YoY in the first two months, it was higher than in 2021. In January earnings were up by 7% and the February performance was up by 6% compared to 2021.
For 2023 the EDB targets to achieve over $ 15.93 billion from merchandise exports, up from $ 13.01 billion achieved in 2022.
Export earnings from tea, which made up 12% of merchandise exports, increased by 9.14% YoY to $ 204.13 million in February 2023. Earnings from the export of tea packets (21.24%) and instant tea (27.52%) increased in February 2023 compared to a year earlier. However, earnings from the export of bulk tea (-15.33%) and tea bags (-27.03%) decreased in February 2023.
In addition, export earnings from the Electrical and Electronics Components (EEC) increased by 13.72% YoY to $ 43.01 million in February 2023 with a strong performance in exports of other EEC products (22.12%).
Earnings from the export of spices and essential oils increased by 27.0% to $ 34.48 million YoY with a strong performance in cinnamon (20.16%) and cloves (412.82 %). Despite the increase recorded in the sector, earnings from pepper and essential oils decreased by 37.90% and 43.41% respectively in February 2023 compared to the same period last year.
Apparel and textile exports dropped by 2.32 % YoY to $ 483.35 million in February 2023. Though earnings from exports of apparel decreased by 14.75%, earnings from export of textiles increased by 146.67% in February 2023 compared to the same period in 2022.
Rubber and rubber finished products earnings have dropped by 17.81 % YoY to $ 76.58 million in February 2022, with negative performance in exports of pneumatic and retreaded rubber tyres and tubes (-6.10%) and industrial and surgical gloves (-45.38%).
On monthly analysis, export earnings of kernel products and fibre products categorised under the coconut-based category decreased by 14.65% and 37.63% respectively in February 2023 compared to the same period in 2022. However, earnings from coconut shell products increased by 28.67% YoY in February 2023.
Export earnings from liquid coconut milk which is categorised under the coconut kernel products decreased by 16.68% YoY to $ 8.69 million in February 2023.
Being the largest contributor to the coconut-based sector, coco peat, fibre pith and moulded products which are categorised under the coconut fibre products, decreased by 35.87% YoY to $ 10.55 million in February 2023.
Earnings from activated carbon, which is categorised under the coconut shell products increased by 2.18% YoY to $ 10.76 million in February 2023.
Seafood export earnings also dropped by 5.57% YoY to $ 19.99 million in February 2023. This decrease was mainly due to the decline in earnings from the export of frozen fish (-3.72%), fresh fish (-7.42%) and shrimps (-38.34%). However, export earnings from ornamental fish increased by 37.93% YoY to $ 2 million in February 2023.
From January to February 2023, merchandise exports decreased by 9.68 % to $ 1.98 billion compared to the corresponding period of 2022.
Export earnings of apparel and textiles, rubber-based products, and coconut-based products decreased by 2.32%, 17.81% and 19.74% respectively during the first two months of 2023 compared to the corresponding period of 2022.
However, earnings from spices and concentrates, EEC, food and beverages and seafood increased YoY by 27%, 13.72%, 17.22% and 5.57% respectively from January to February.
Apparel and textile exports decreased by 10.18% to $ 946.46 million during the period of January to February 2023 compared to the same period in 2022, export of apparel was down by 16.82%, while export of textiles increased by 74.16% in January to February 2023.
Tea export earnings increased by 6.27% to $ 204.13 million during the period of January to February 2023 compared to the corresponding period of 2022. Exports of all the subcategories of the tea sector except bulk tea and tea bags; tea packets (14.74%), instant tea (42.78%) and green tea (21.82%) increased during the period of January to February 2023 compared to the same period last year.
Rubber and rubber-finished products decreased by 15.44 % to $ 152.45 million in January - February 2023 compared to the same period of 2022 attributed to lower exports of pneumatic and retreated rubber tyres and tubes (-5.22%) and export of industrial and surgical gloves of rubber (-35.92%).
Coconut and coconut-based products export earnings decreased by 24.58% YoY to $ 102.72 million from the same period last year. Earnings from all the major categories of coconut-based products decreased in the period of January - February 2023 compared to 2022 due to the poor performance in the export of liquid coconut milk, coconut cream, coconut milk powder, cocopeat, activated carbon, coconut oil and desiccated coconut.
Earnings from the export of EEC increased by 10.19% to $ 81.29 million from January to February 2023 compared to the corresponding period of 2022. Earnings from the export of switches, boards and panels and other EEC products increased by 37.31% and 19.03 % YoY respectively during the period of January to February 2023.
Seafood export earnings decreased by 1.84% YoY to $ 140.71 million in the period of January to February 2023 due to the poor performance in all the sub-categories; frozen fish (-7.5%) and prawns (-44.03%).
Export performance in major markets
Out of the top 15 export markets, Italy, Canada, UAE and Bangladesh recorded a positive performance in February 2023.
During the period of January to February 2023, only UAE recorded a positive performance compared to the corresponding period of the previous year.
Exports to the US – Sri Lanka’s single largest export destination, decreased by 20.94% YoY to $ 231.06 million in February 2023. In addition, exports to the US decreased by 17.31% YoY to $ 485.83 million in the period of January to February 2023 compared to the same period in 2022. Exports to the UK decreased by 15.77% YoY in February 2023, whilst in the first two months it declined further by 10.21% YoY to $ 146.25.
Exports to FTA partners
During the month of February 2023, exports to Free Trade Agreement (FTA) partners accounted for 6.5% of total merchandise exports decreased by 52.01% to $ 128.08 million.
However, exports to Pakistan increased due to the higher exports of other textile articles in February 2023 compared to February 2022. In addition, poor performance recorded in India was led by lower exports of pepper.
However, exports to FTA partners accounted for 7.2% of total merchandise exports increased by 23.11% to $ 202.6 million during the first two months of 2023 compared with the corresponding period in 2022.
Although exports to Pakistan increased by 303.08% YoY to $ 62.88 million, exports to India decreased by 6.21% to $ 139.72 million from January to February 2023 compared to the corresponding period of 2022.
Increased exports to Pakistan are mainly supported by exports of other textile articles.
Sri Lanka’s export performance in regions
On a region-wise comparison, exports to the European Union (EU) which comprised 21% of Sri Lanka’s exports during the month of February 2023 decreased by 14.48% YoY to $ 417.71 million.
Exports breakdown of exports to the top five EU markets which accounted for 80% of Sri Lanka’s total exports to the EU were; Germany $ 98.61 million (down by 18.44%), Italy $ 100 Italy $ 100.28 million (down by 2.56%), Netherlands $ 54.1 million (down by 24.6%), Belgium $ 37.36 million (down by 21.28%) and France $ 35.22 million (down by 18.15%).
