Sri Lanka is entering a new era of economic recovery, with its export sector emerging as a key engine of growth and resilience(Sri Lanka’s Export Resurgence: A Strategic Path to Economic Recovery in 2025). Amid global and domestic economic challenges, the island nation has made notable progress in expanding its export footprint, diversifying its product base, and penetrating new international markets. From agriculture to apparel and ICT to spices, 2025 is shaping up to be a transformative year for Sri Lankan exports.
A Look Back: 2024 Sets the Foundation
The export momentum in 2025 is built on strong performance in the previous year. In 2024, Sri Lanka recorded its highest-ever export earnings of approximately US$16.17 billion, marking a 7.06% increase compared to 2023. This impressive growth was a combination of US$12.7 billion in merchandise exports and US$3.46 billion in services exports, showcasing balanced expansion across both physical and intangible sectors.
This export boost contributed significantly to stabilizing foreign exchange reserves and narrowing the trade deficit, making it a critical component of Sri Lanka’s post-crisis economic stabilization strategy.
First Four Months of 2025: Strong Start to the Year
The first four months of 2025 have continued this positive trend. Merchandise exports rose to US$4.33 billion, a 6.86% increase compared to the same period in 2024. When services such as ICT and tourism-related exports are added, total exports reached US$5.52 billion, reflecting nearly 7% growth year-on-year.
This consistent upward trajectory underscores the resilience and adaptability of Sri Lankan exporters, who are finding new ways to compete in international markets despite global economic uncertainties.
Sectoral Growth: What’s Driving the Export Surge?
- Apparel and Textiles
The apparel sector remains the cornerstone of Sri Lanka’s export economy. In the first four months of 2025, exports in this category climbed by 11.59%, totaling around US$1.5 billion. The United States and the United Kingdom continue to be strong markets, with exports to these destinations growing by over 10% and 6%, respectively.
What sets Sri Lanka apart in the global apparel market is its emphasis on ethical manufacturing, sustainable production, and high-quality craftsmanship—qualities that resonate strongly with modern consumers and global fashion brands.
- Tea
Sri Lanka’s globally renowned tea industry also experienced a resurgence. Tea exports grew by 6.23% in early 2025, reaching nearly US$480 million. This growth was largely fueled by increased demand for value-added products like packaged tea, which grew by nearly 19%.
As one of the most iconic Ceylon exports, tea continues to provide not just revenue but also a strong brand identity for Sri Lanka on the world stage.
- Coconut-Based Products
Exports of coconut and coconut-derived products posted a sharp increase of 25.3%, reaching over US$330 million in revenue. Demand was especially strong for value-added items such as coconut oil, coconut milk powder, and coconut cream, which posted growth rates as high as 88%.
This reflects a global shift toward plant-based products, wellness foods, and sustainable packaging—all of which position Sri Lankan coconut products favorably.
- Spices and Essential Oils
The spice sector saw explosive growth, with exports jumping over 63%, totaling around US$143 million. Pepper exports soared by over 220%, while cinnamon and clove exports also posted significant increases.
Sri Lanka’s unique agro-climatic zones and centuries-old reputation for quality spices make this sector a promising area for future export expansion.
- ICT and Business Process Management (BPM)
The digital economy has become a vital contributor to export revenue. The ICT/BPM sector grew by nearly 5%, generating close to US$493 million in the first four months of 2025. This growth reflects rising global demand for tech-enabled services, with Sri Lanka offering a highly educated, English-speaking talent pool at competitive costs.
Market Diversification: Expanding the Global Footprint
Sri Lanka’s exports are not only growing—they’re becoming more diversified, both in terms of products and markets.
United States: The US remains the largest export market, with exports growing by nearly 8%, surpassing US$965 million in just four months. Demand is especially strong for apparel, rubber-based products, and IT services.
India: As a rapidly growing export destination, India showed a remarkable 39% growth, totaling US$324 million. Increased shipments of pepper, animal feed, and coconut products played a major role.
European Union: The EU now accounts for nearly a quarter of Sri Lanka’s exports, with steady growth across apparel, seafood, and organic produce.
Such geographic diversification is critical for reducing dependence on any single market and building long-term export resilience.
Challenges: What’s Holding Back Further Growth?
While many sectors are thriving, a few industries have faced headwinds:
- Seafood: Exports declined by over 17%, mainly due to reduced demand for fresh fish and shrimp in key markets.
- Rubber Products: Despite past successes, this sector saw a 6.7% decline, especially in tyres and industrial components.
- Electronics: Exports in electrical and electronic components fell by 6.3%, a result of weakened global demand and rising input costs.
- These sectors require targeted policy support, including subsidies, quality certifications, and easier access to global supply chains, to regain momentum.
Trade and Diplomacy: Strategic Partnerships in Focus
To sustain and grow exports, Sri Lanka is actively engaging in trade diplomacy. Key initiatives include:
- Strengthening bilateral ties with countries like New Zealand to explore market entry opportunities for organic and agri-products.
- Renewing discussions with the United States on tariff reductions for apparel and food exports.
- Exploring regional trade partnerships to reduce logistics costs and ensure preferential market access.
- These strategic efforts are crucial to ensuring that Sri Lanka’s exports remain competitive in an increasingly protectionist global environment.
The Road Ahead: Policy, Innovation, and Investment
To unlock the full potential of its export sector, Sri Lanka must:
Promote Innovation: Invest in R&D to develop new exportable products, especially in the tech, agri-value, and sustainable packaging sectors.
Enable SMEs: Support small and medium enterprises with credit, market access, and capacity-building programs.
Reduce Red Tape: Streamline customs, licensing, and compliance systems to make it easier to do business.
Promote Sustainability: Align exports with ESG (Environmental, Social, and Governance) standards to meet the expectations of international buyers.
Leverage Technology: Utilize digital platforms for trade facilitation, logistics optimization, and access to global marketplaces.
Conclusion: A Pivotal Moment for Sri Lankan Exports
Sri Lanka’s export growth is not just a number—it represents a broader economic revival, a renewed confidence in global markets, and a blueprint for sustainable development. The upward trend seen in early 2025 is a clear sign that, with the right strategies, Sri Lanka can strengthen its global trade position and secure long-term prosperity.
For policymakers, exporters, and investors alike, this is a moment of opportunity—one that must be seized with vision, coordination, and ambition.
