COLOMBO: Sri Lanka has posted improvement in garment shipments to the United States and European Union (EU) markets. However, the country’s apparel and textile export earnings have fallen slightly during the first eight months of 2017.

 

The European Union announced on May 16 that it was restoring a preferential tax concession for goods imported from Sri Lanka that it withdrew seven years ago over alleged human rights abuses. The move has helped to boost sentiments in the country’s garment industry. Besides, textile exporters are getting good enquiries form the US markets. According to the latest data from the Central Bank of Sri Lanka, earnings from textile and garment exports fell to $3.28 billion from January to August 2017, compared with $3.33 billion in the same period last year.

 

Results for the first six months had shown a 5.2 per cent decline as a result of a drop in shipments to the US and EU, but this has now rebounded, the bank said.

 

Executives from Sri Lanka’s apparel sector are predicting exporters can generate an extra $400 million to $500 million in annual sales after the country regained the Generalised Scheme of Preferences Plus (GSP Plus) duty-free trade concession with the EU.

 

The country had lost the trade benefit in 2010 because of human rights violations during the previous government. Earlier this year, the European Commission proposed that the EU to remove duties on 66 per cent of tariff lines imported from Sri Lanka, including textiles and clothing, to restore its ‘GSP Plus’ status.

 

In the eight-month period, apparel exports dropped 1.9% to $3.09 billion, while textile exports jumped 10.9 per cent to $137.8 million.

 

On November 27, the Central Bank of Sri Lanka published data showing that the trade deficit widened by 7.5 per cent year on year in September, to $656 million, whereas remittances fell by 16.7 per cent to $481 million.

 

 

The country’s imports grew by 10.5 per cent year on year, to $1.7 billion in September, compared with $1.5 billion in the year-earlier period. The major factors driving the increase in the import bill were higher fuel and base metal imports, which were up by 69.3 per cent and 64 per cent respectively.  Exports rose by 12.6 per cent, earning just over $1 billion.

 

The main driver of export growth was shipments of textiles and garments, which increased by 12.9 per cent to $431.5 million. Rubber and petroleum products also contributed to the year-on-year increase in overall exports.

 

The latest data are in line with the expectations that the trade deficit will widen over the forecast period (2018-22) as import growth will be consistently stronger than export growth. Most of the increases in imports will be led by higher imports of fuel (mainly crude oil). The fuel import bill will also be inflated by a recovery in global oil prices. Colombo expects that exports will also rise over 2018-22, driven mainly by garment shipments and a pick-up in demand in major markets such as the EU and US. However, export earnings will be offset by larger increases in imports.

 

Reuters