Exports slump to five- month low in October

• October exports at $ 899.91 m down by 18% YoY and lowest since $ 849 m in April
• Apparel and textiles, rubber and rubber-based products, coconut and coconut-based products drop due to sluggish demand
• Cumulative merchandise export earnings in first 10 months down 9.58% to $ 9.87 b
• Services exports in January-October up by 67.2% to $ 2.6 b

Exports in October dipped by 18% year-on-year (YoY) to the lowest in five months provisional data released by the EDB revealed, reinforcing private sector concerns on mounting challenges.

The Sri Lanka Export Development Board (SLEDB) said, October merchandise export performance was $ 899.91 million, down by 17.85% from a year ago. The previous lowest was in April at $ 814.13 million. Sri Lanka saw 2023’s highest export performance in August of $ 1.09 billion though down by 8.7% from a year ago. In comparison to September 2023, the October performance was down by 13%.

The EDB said the decline in merchandise exports is due to decreased demand for export products, particularly in sectors such as apparel and textiles, rubber and rubber-based products and coconut and coconut-based products.

From January to October 2023, cumulative merchandise exports saw a substantial decline of 9.58% YoY to $ 9.87 billion compared to the corresponding period of 2022.

The estimated value of services exports from January to October 2023 was $ 2.6 billion, increasing 67.2% from a year ago. The services exports estimated by EDB consist of ICT/BPM, construction, financial services and transport and logistics.

Despite the original EDB forecast of $ 18.51 billion in merchandise and service exports in 2023 including $ 15.93 billion from merchandise exports and $ 2.58 billion from services exports, the EDB Chairman Dr. Kingsley Bernard said it was very difficult to forecast amid the global headwinds and recession in key markets and adverse impacts of the ongoing wars.

“We cannot estimate the numbers for the year amid the highly volatile global scenario,” he told the Daily FT.

Export earnings from food and beverages have increased by 20.77% YoY to $ 36.86 million in October 2023, with a strong performance in exports of Processed food (29.49%).

Export earnings from seafood increased by 3.73% to $ 20.29 million in October 2023 compared to October 2022. This increase was mainly due to the strong performance in the export of Frozen fish (5.21%) and Fresh fish (13.78%).

Moreover, export earnings from ornamental fish increased by 35.71% to $ 2.47 million in October 2023 compared to October 2022.

Furthermore, the estimated value of ICT exports is expected to increase by 96% to $ 166.01 million in October 2023 when compared to October 2022. Also, the value of Transport and logistics services exports is expected to increase by 54.73% in October 2023 compared to the corresponding period in the previous year.

However, export earnings from apparel and textiles have decreased by 20.05% YoY to $ 353.3 million in October 2023 compared to October 2022.

Export earnings from tea which made up 12% of merchandise exports, decreased by 12.02% YoY to $ 95.63 million in October 2023 compared to October 2022. This decline is mainly due to the negative performance in the export of bulk tea, which decreased by 18.81% to reach $ 43.35 million in October 2023.

In addition, Export earnings from Rubber and Rubber finished products have decreased by 7.66% YoY to $ 79.7 million in October 2023, with a strong performance in exports of Industrial and surgical gloves of rubber (19.32%).

On monthly analysis, export earnings of coconut-based products decreased by 17.57% in October 2023 compared to October 2022. Moreover, export earnings of coconut fibre products and coconut shell products decreased by 42.67% and 25.35% respectively in October 2023 compared to October 2022.

Earnings from Activated Carbon, which is categorised under the coconut shell products decreased by 25.49% to $ 11.11 million in October 2023 compared to October 2022.

In addition, export earnings from the electrical and electronics components decreased by 18.74% YoY to $ 37.59 million in October 2023 with poor performance in exports of Electrical Transformers (-48.02%).

Export earnings from spices and essential oils decreased by 10.14% to $ 32.7 million in October 2023 compared to October 2022. This decrease was primarily driven by a significant decrease in the export of Cinnamon by 12.02%.

Cumulative merchandise exports during the period of January to October 2023, decreased by 10.54% to $ 9,879.8 million compared to the corresponding period of 2022.

Earnings from the export of tea, spices and concentrates, gems and jewellery, electronics and electronic components and food and beverages increased by 3.83%, 7.62%, 1.34%, 3.39% and 2.71% respectively during the period of January – October 2023 compared with the corresponding period of 2022.

Earnings from the export of tea increased YoY by 3.83% to $ 1,085.94 million from January to October 2023. This increase was mainly due to the strong performance in the export of tea packets (12.27%).

In addition, export earnings from spices and essential oils increased YoY by 7.62% to $ 335.39 million from January to October 2023. This increase was due to the strong performance in exports of Pepper (21.12%), Cloves (205.81%) and Nutmeg and mace (22.38%).

Earnings from the export of electrical and electronic components (EEC) increased by 3.39% to $ 414.26 million from January to October 2023 compared to the corresponding period of 2022. Under the EEC sector, earnings from the export of pump circuits, boilers/piston engines/pumps, vacuum pumps and other electrical and electronic products increased by 50.1%, 678.79% and 3.43% respectively from January to October 2023 compared to the corresponding period of 2022.

The value of ICT exports is estimated to increase by 43.59% to $ 1,353.99 million in the first ten months of 2023 compared to the corresponding period of 2022. In addition, Construction, Financial and Transport and logistics services exports are estimated to increase by 788.1%, 70.51% and 99.15% respectively from January to October 2023 compared with the corresponding period of 2022.

Earnings from the export of Apparel and textiles decreased by 19.46% to $ 4,030.68 million from January to October 2023 compared to the same period of 2022. Further, earnings from the export of Apparel declined by 19.46% and the export of Textiles declined by 5.13% from January to October 2023.

In addition, export earnings from Rubber and rubber finished products decreased by 11.71% to $ 771.86 million in January – October 2023 compared with the same period of 2022 attributed to lower exports of Industrial and Surgical Gloves of Rubber (-25.59%) and Pneumatic and Retreated Rubber Tyres and Tubes (-4.99%).

From January to October 2023, export earnings from coconut and coconut-based products decreased by 16.92% to $ 590.69 million from the same period last year. Earnings from all the major categories of coconut products decreased from January to October 2023 compared with the corresponding period of 2022 due to the poor performance in export of coconut oil (-16.28%), desiccated coconut (-26.09%), coconut milk powder (-7.13%), coconut cream (-9.12%), liquid coconut milk (-7.99%), Cocopeat (-17.61%) and activated carbon (-18.98%).

Further, export earnings from seafood decreased by 5.18% to $ 213.24 million from January to October 2023 compared to the year 2022 due to the poor performance in Frozen Fish (-4.36%), Shrimps (-31.77%) and Crabs (-22.83%).

Among the top 10 export markets, Italy has shown a strong performance in both the month of October 2023 and the period of January to October 2023 when compared to the corresponding periods in the previous year. Furthermore, UAE and France have shown significant performance from January to October 2023 compared to the corresponding period in the previous year.

Exports to the US, Sri Lanka’s single largest export destination, decreased 13.84% to $ 206.77 million in October 2023 compared to October 2022. Further, exports to the US decreased by 19.18% to $ 2,281.57 million from January to October 2023 compared to the same period in 2022.

In October 2023, exports to Free Trade Agreement (FTA) partners constituted 6.5% of the total merchandise exports, experiencing a notable 22.27% decrease to reach $ 71.22 million, compared to October 2022. Specifically, both exports to India and Pakistan recorded decreases of 22.18% and 23.30%, respectively, during October 2023 compared to October 2022.

The negative performance of India was driven by lower exports of petroleum oil (-73.51%) and animal feed (-24.04%), while Pakistan’s negative performance was led by decreased exports of betel leaves.

From January to October, FTA partners accounted for 7.2% of total merchandise exports decreased by 0.77% to $ 786.09 million compared to a year ago.

Both exports to India and Pakistan decreased by 0.69% and 1.58% respectively from January to October 2023 when compared with the corresponding period of 2022.

The negative export performance of India was driven by lower export of Animal feed (4.47%), while Pakistan’s negative performance was led by decreased export of Sheet rubber and other articles of stones.

Exports to the European Union (EU) which comprised 21% of Sri Lanka’s exports during October 2023 decreased by 23.52% YoY to $ 213.18 million. Further, exports to the European Union (EU) decreased by 12.19% YoY to $ 2,257.58 million from January to October 2023 compared to the corresponding period of the previous year.

From January to October 2023, the breakdown of exports to the top five EU markets which accounted for 78% of Sri Lanka’s total exports to the EU were; Italy’s $ 571.48 million (up by 6.65%), Germany’s $ 484.28 million (down by 23.59%), Netherlands $ 270.92 million (down by 23.31%), France $ 266.99 million. (up by 19.47%) and Belgium $ 186.89 million (down by 29.86%).