- Largely due to Brexit and impacts from second wave of COVID-19
- Export earnings contract 10% YoY to US $ 908mn and 5.8% MoM
- Apparel and textile exports decline 11% to US $ 421mn
- Higher earnings from tea, spices and essential oils, coconut and rubber-based product exports
- Spices and essential oils sector becomes fastest growing export sector
Sri Lanka’s merchandise export earnings recorded a slight slowdown in January, following the strong rebound in export earnings in December 2020, due to Brexit and impacts from the second wave of the COVID-19 pandemic extending to 2021.
Sri Lanka’s merchandise export earnings contracted by 9.64 percent year-on-year (YoY) in January to US $ 908.07 million, the data collected by Sri Lanka Customs and compiled by the Export Development Board (EDB) showed.
On a month-on-month (MoM) basis, the merchandise export earnings declined by 5.8 percent in January, after recording a strong rebound in December, largely recovering from the disruptions caused by the second wave of the pandemic since October, last year.
“The exports, which started to grow since last July, continued the positive performance till September 2020, with minor contractions with reduced figures from October to December 2020. However, growth in exports in January 2021 is still modest, compared to the last five years,” the EDB said. In January, earnings from apparel and textile exports declined by 10.76 percent YoY to US $ 421.28 million, mainly due to the pandemic-related disruptions and Brexit. However, export earnings from other textiles, mostly personal protective equipment (PPE), rose by 25.21 percent YoY in January.
On a positive note, export earnings from tea, spices and essential oils, coconut and rubber-based products, rose during the month.
The export earnings from tea rose by 1.25 percent YoY to US $ 101 million, after falling to four-year low in January, last year. However, tea export earnings fell by 10 percent in January, when compared to the earnings in December 2020.
The tea export earnings growth in January was driven by a 15.86 percent growth in bulk tea exports while tea packets and tea bag exports recorded double-digit declines.
The rubber and rubber finished products sector recorded a robust 15.46 percent YoY increase in export earnings to US $ 84.16 million in January, mainly due to the enhanced export performance of pneumatic and retreated rubber tyres and tubes and industrial and surgical rubber gloves and rubber-based hygienic or pharmaceutical articles. Similarly, export earnings from coconut-based products grew by 10.5 percent YoY to U S $ 54.18 million in the month, backed by export growth across nearly all product categories, including coconut fibre, coconut kernel products and coconut shell products.
Most notably, the spices and essential oils sector became the fastest growing export sector in January. The data showed that export earnings from spices and essential oils rising by a record 115.9 percent YoY to US $ 42.22 million in the month while becoming the fifth largest export earner.
The impressive growth was due to the 432.93 percent YoY growth in pepper exports, followed by 82.28 percent, 184.73 percent, 50.62 percent and 142.22 percent YoY growth rates in cinnamon, cloves, nutmeg and mace and essential oils export earnings.
The electrical and electronic component (EEC) exports also recorded a modest growth of 12.86 percent YoY, reaching US $ 31.85 million in earnings in January.
Meanwhile, the export earnings from petroleum products collapsed by 98.71 percent YoY to a record low of US $ 0.46 million in January. Earnings from seafood exports extended their downward trend in January, recording a 28.53 percent YoY drop.
Meanwhile, the services exports estimated by the EDB, which include ICT/BPM, construction, financial services and transport and logistics, showed a 6.94 percent YoY increase, reaching US $ 353.98 million in January. Sri Lanka’s exports to the largest three key markets— the United States, UK and India— declined by double digits in January.
Being the largest single export destination, the exports to the United States declined by 12.7 percent YoY to US $ 233.53 million in January.
Sri Lanka’s exports to the UK declined substantially by 27.93 percent YoY to US $ 61.49 million in January, as that country moved to a new tariff regime, UK Global Tariff (UKGT), from January 1, 2021, upon the conclusion of Brexit transition period.
“Most of the drop in exports to the UK was due to Brexit but January 2021 also saw the reimposition of lockdown in the UK, which undoubtedly had some impact,” the EDB said.
However, Sri Lanka’s exports to the European Union (excluding the UK) rose by 10.03 percent YoY to US $ 234.03 million in January.
The EDB targets US $ 15.68 billion in export earnings this year, including US $ 12 billion from merchandise exports.