Due to the ramifications felt by the supply chains of the dominant export sectors of Sri Lanka from COVID-19, achieving the EDB’s anticipated export target of US$ 18.5 billion this year is in quandary, according to EDB Chairman Prabhash Subasinghe.
“The export target of US$ 18.5 billion set for this year will be difficult to achieve. Sri Lanka’s single largest export market is the USA which accounted for 27 % of total merchandise exports last year. However, the European Union accounted for 30%. Consumers in Europe and in the near future those in the USA too may reduce consumption and the demand for imported goods will be low,” Subasinghe said.
Subasinghe predicted a drop of 25% in exports during the second quarter due to the outbreak.
“Sri Lanka’s exports was US$ 16.14 billion in 2019 and it is predicted that the drop in exports could be as much as 25% in the next quarter,” he said.
Sri Lanka’s top five export industries – apparel, tea, rubber, coconut and processed food – are facing setbacks due to this global epidemic.
“Most manufacturers are in search of other sources of supply for raw materials and accessories, but such sources, including even India, are not price competitive”, he added.
The EDB Chief said that tea importing countries such as China, Hong Kong, and Korea, had slowed down on their purchases while predicting that the shipments to Iran – the fourth largest market of Ceylon Tea in 2019 – could also be affected.
“China is a major market for Sri Lankan coconut fibre. Due to the outbreak, Chinese factories have reduced their production of value added products, and Sri Lankan fibre millers are holding heavy stocks.
Subasinghe also projected difficult times ahead for the tyre industry, as the major raw materials of the tyre industry such as chemicals, nylon cords, moulds, tyre building and other accessories are mostly sourced from China,” he said.
According to Subasinghe, seafood exports had declined by 35% last week and it is expected to drop by 25% over the next quarter owing to the outbreak of the virus in Italy, which is Sri Lanka’s largest market for seafood in Europe.
“Other export sectors such as food and beverages, boat and shipbuilding, pharmaceutical, gems and jewellery, electronic and electrical products, printing, ICT/BPM and the logistic sector are also badly affected,” Subasinghe said.