Sri Lanka’s export earnings slide amidst a drop in US demand

Sri Lanka’s earnings from merchandise exports increased  by 0.4 percent to USD 979 million in October 2018 mainly reflecting the decline in agricultural exports by 11.5 percent which offset the 4.5 percent growth of industrial exports, the Central Bank disclosed.

Analyzing the external sector performance, the economic research department of the bank noted that industrial exports, export earnings from textiles and garments, increased marginally in October 2018 due to higher earnings from textile exports despite the slight decline registered in garment exports.

The reduced earnings from garment exports was mainly driven by the lower demand from the USA as the sentiment of buyers of Sri Lankan garment buyers badly hit by the political coup instigated by the president, economic analysts said.      

However, there was an increase in exports to the EU market and non-traditional markets such as India, Canada, Japan and Hong Kong. Further, reflecting the combined impact of both volume and export prices.

Earnings from petroleum products increased significantly in October 2018. Export earnings from food, beverages and tobacco and base metals and articles increased substantially during October 2018 due to improved performance in most of their sub categories.

In addition, export earnings from animal fodder, machinery and mechanical appliances and transport equipment rose in October 2018, contributing towards the increase in industrial exports.

Be that as it may, export earnings from rubber products, gems, diamonds and jewellery and leather, travel goods and footwear declined in October 2018.

Meanwhile, earnings from agricultural exports were lower during the month owing to the poor performance in almost all sub categories except seafood, vegetables and rubber.

Reflecting lower average export prices and exported volumes, export earnings from tea declined in October 2018.

Export earnings from spices also reduced during the month due to the poor performance in most categories of spices.

Further, despite an increase in earnings from coconut non-kernel products, earnings from coconut exports decreased due to the drop in earnings from coconut kernel products such as desiccated coconut and coconut oil.

However, owing to higher exports to the EU market, earnings from seafood exports rose during the month.