Apparel sector to face worse times

Lalin FERNANDOPULLE
 

Apparel exporters said that the impact of the world financial crisis on exports will be felt in the coming months with a significant reduction in orders from the United States and the European Union.

" Export demand in January did not decline due to prior orders but there will be a sharp decrease hereafter as the global crisis intensifies", exporters said.

Exports

Exports to the EU increased by six per cent while thse to the US markets dropped by two per cent for the first month of the year.

Apparel manufacturers have imposed severe job cuts and have reduced production to face the crisis.

Leading apparel and textile manufacturers in the country have reduced the staff and resorted to various measures until the crisis eases off which experts predict would take over a year.

The Central Bank in its external sector performance report for January 2009 said despite a challenging year exports of textile and garments for January were encouraging as they grew by 4.5 per cent.

Deficit

The Bank said trade deficit contracted by 66.5 per cent in January, year-on-year to US$ 208 million, led by low trade volumes.

While exports declined by 11.6 per cent to US$ 491 million, imports decreased by 40.5 per cent to US$ 699 million.Overall exports declined by 5.2 per cent to US$ 385 million.

The agriculture and industrial sectors which were affected by the decline in world commodity prices contributed to the drop in export earnings.The decline in agricultural exports contributed over 50 per cent of the total decline in exports in January.

While exporters accept that the drop in exports was due to the global crisis the over valued Sri Lankan rupee is a major obstacle for export competitiveness.

Many countries have devalued its currency to sustain exports.

Fact Box Apparel

January 2009 - retention of GSP plus and sustaining existing business major challenges

External Trade and Private Remittance Performance: January 2009
Category		January		Janauary		Growth
			2008		2009			January
			US$ mn		US$ mn			(per cent)
			555.3		491.1			-11.6
Exports	
Agricultural		134.1		101.0		   	-24.7
of which tea		90.8		61.5		  	-32.3
Industrial		406.0		385.1		 	-5.2
of which textiles
and garments		230.2		240.6		    	4.5
Mineral			15.3		5.1		  	-66.8
			1,175.2		698.8			-40.5
Imports
Consumer Goods		201.2		153.8		 	 -23.6
Intermediate Goods	659.5		356.9		  	 -45.9
of which petroleum	301.2		103.6	 	 	 -65.6
Investment Goods	305.1		176.7			 -42.1
	
Balance of Trade	-619.8		-207.7			 -66.5
Private Remittances	 274.0		 256.0			 -6.6

                 	Sources: Central Bank of Sri Lanka  Sri Lanka Customs Department