Sri Lanka’s ambitious export target of $16 billion for 2024 is under pressure as the country faces economic challenges and slower-than-expected growth, according to Export Development Board (EDB) Chairman, Mangala Wijesinghe. As global markets remain uncertain, the EDB is refocusing its strategy to prioritize stable and high-demand sectors like textiles, garments, and IT/BPO services, while also exploring potential in niche markets.(Export Goals)
Growth Target and Economic Slowdown
The EDB had set a high target for exports this year, but as of the first nine months of 2024, exports grew by only 5.7% compared to the previous year, achieving around 74% of the annual target. Wijesinghe acknowledged that this slower pace could make it challenging to reach the $16 billion goal by year-end.
To navigate these economic shifts, the EDB is focusing on strengthening sectors that show consistent demand, such as textiles and garments. By investing in these areas, the EDB hopes to create a resilient foundation that can weather global market fluctuations.
Promising Areas for Export Growth
The EDB has identified several high-potential areas that could help boost export performance. Value-added apparel and sustainable textiles are seen as key growth sectors, particularly as demand for environmentally friendly products rises globally. Similarly, the demand for tech-based services, especially in the IT/BPO sector, is expected to contribute significantly to export growth.
Wijesinghe also noted opportunities in the food and beverage industry, particularly in organic and sustainable products. With a growing global market for organic food, Sri Lanka could capitalize on high-margin exports of value-added agricultural items such as spices and organic products that appeal to niche markets abroad.
Challenges Impacting Export Competitiveness
Despite these promising areas, Sri Lanka faces economic challenges that impact export competitiveness. A significant factor is the expanding trade deficit, partly due to the rising costs of imported goods essential for production. Although Sri Lanka achieved a $2.28 billion surplus in the Balance of Payments as of September, the overall trade balance remains under pressure due to high import costs.
Additionally, an appreciating Sri Lankan rupee has presented a mixed impact. While a stronger currency helps reduce import expenses, it can also make Sri Lankan exports more expensive and less competitive internationally. The EDB noted that in September, the Real Effective Exchange Rate (REER) index reached 72.6, indicating the challenge of balancing currency value with export growth.
Support for SMEs, Women Entrepreneurs, and Youth in Exports
The EDB is committed to supporting small and medium enterprises (SMEs), women-led exporters, and young entrepreneurs as a part of its mission to promote inclusive economic growth. Through initiatives like the “Women Lead Exports” program, the EDB provides training, resources, and support to women entrepreneurs to help them succeed in international trade. Over 474 women entrepreneurs currently participate in the program, receiving guidance on various aspects of business, including export packaging, pricing, and market access.
The EDB’s efforts to foster an inclusive export environment are supported by partnerships with international organizations such as Germany’s Import Promotion Desk and the International Trade Centre (ITC). These partnerships provide mentorship, technical training, and access to credit, helping build a sustainable export ecosystem that includes diverse contributors from across the country.
Simplifying Regulations and Enhancing Market Support
In response to feedback from exporters in sectors like gems and jewelry, IT, and spices, the EDB is working to simplify regulatory processes and improve support systems. Many exporters have expressed a need for streamlined regulations, digitized processes, and enhanced logistics to offset rising import costs and to compete effectively in global markets.
The EDB is actively engaging with industry stakeholders to address these challenges, offering targeted support and market intelligence to help exporters navigate international trade requirements. By easing regulatory burdens and improving digital infrastructure, the EDB aims to create a more efficient and accessible export process for Sri Lankan businesses.
Building a Sustainable Export Sector
Despite external economic pressures, Wijesinghe remains optimistic about the resilience of Sri Lanka’s export sector. He emphasized the importance of digital transformation, regulatory simplification, and targeted support for key industries as essential steps toward building a stable and sustainable export sector. The EDB’s commitment to these goals reflects a long-term strategy to create a strong economic foundation that supports growth and stability.
With these initiatives, the EDB aims to provide Sri Lankan exporters with the tools and support they need to succeed in a dynamic and challenging global market. While the $16 billion export target may be ambitious, Wijesinghe believes that by focusing on high-potential sectors and addressing key challenges, Sri Lanka can build a resilient export industry capable of driving economic growth in the years to come.
