Textile and apparel exports boost external sector earnings

Textiles and apparel export earnings recorded a steady growth in June this year, a Central Bank report revealed last week. The increase in apparel export income had contributed to the growth in industrial export earnings during the month.

Industrial income increased by 18.7 percent year-on-year, to US $ 725 million in June due to favourable performance in major export categories such as textiles and garments, rubber products and leather products, the report said.

Textiles and garment exports which account for 45.3 percent of exports grew 25 percent, year-on-year, to US $ 446 million contributing over 50 percent to overall growth in exports in June. The significant increase in exports to traditional markets such as the EU increased by 34.6 percent and USA 12.1 percent and non traditional markets 44.5 percent contributed to the growth.

Apparel exporters said that the growth in the apparel industry indicates the industry is poised to achieve the export target of US $ 5 billion by 2016.

An apparel exporter said that backward integration and promotion of new Sri Lankan brands in the international market will help surpass the goals set for the future.

The maintenance of safety and other international standards helped the textile and garment industry in Sri Lanka to face strong competition in international markets, the Central Bank report revealed, highlighting further the growth in external sector which contributed to the decline in the trade deficit.

It said that the decline in import expenditure on oil helped narrow the deficit in June.

Inflow on account of workers’ remittances and earnings from tourism also increased during the month, contributing to a further reduction in the current account deficit.

These developments with continued inflow to the financial account resulted in a healthy surplus in the balance of payments by end June 2014.

The cumulative trade deficit contracted by 20.1 percent, as a result of a 16.8 percent growth in export earnings and a 1.2 percent decline in import expenditure during the first half of 2014.

On a year-on-year basis, earnings from exports in June 2014 grew by 22.0 percent to US $ 986 million, while expenditure on imports declined by 4.6 percent to US $ 1,439 million.

Accordingly, the trade deficit contracted for the ninth consecutive month in June by 35.3 percent to US $ 454 million.

Expansion in all major export categories contributed to the growth in exports in June, Central Bank sources said.

Industrial exports, which was the major contributor to export earnings (64 percent) led the growth in overall exports, followed by agricultural exports (36 percent).

Export of rubber products which is the second major contributor to industrial exports grew by 11.1 percent to US $ 77 million in June 2014 mainly due to an increase in export of rubber tyres.

Although the continued decline in the international price of raw rubber has had a negative effect on raw rubber exports, this has benefitted domestic manufacturers of rubber products and encouraged value added rubber exports.