Ukraine crisis not a major threat to exports

The crisis in Ukraine has hit markets across the globe and stifled exports to the country. Ukraine, an Eastern Europe country became independent following the disintegration of the Soviet Union.

Europe is a major market for Sri Lankan apparel, tea and other export items.

Russia is a large importer of tea from Sri Lanka. Exporters said that though there may not be an immediate impact on Sri Lanka's exports there could be a long-term impact due to the crisis.

Sri Lanka Apparel Exporters Association, Chairman Yohan Lawrence said that Ukraine is not a major market for Sri Lankan apparel and added that the crisis would not have a significant impact on exports.

“We have to watch developments in the region closely,” he said.

Chairman, Tea Advisory Committee, Ministry of Industry and Commerce, Rohantha Athukorala said that tea exporters do well in troubled markets. In the case of Ukraine our exports are limited, so there will be little impact to tea export revenue. But in the larger context we will have to watch developments closely in that part of the region especially the situation in Russia.

Vice President, South Asia, Managing Director, IFS Sri Lanka, Jayantha de Silva said that the Ukraine crisis could have an indirect impact on the IT and BPO industry which could withstand external shocks.

Trouble erupted in the Ukraine three months ago when the then-president Viktor Yanukovych rejected a European trade deal that would have indicated a shift from dependence on Russia.

A large portion of the Ukrainian population wanted closer ties with Europe, but Russian President Vladimir Putin pressurised the country to integrate closely with Moscow.

Ukraine borders Russia to the East and North East, Belarus to the North West Poland, Solvakia and Hungary. With an area of 603,628 square kilometres, Ukraine is the largest country in Europe.

Russia’s Micex index was down over 11 percent last week and the rouble hit a record low against the US dollar.

US futures were down sharply as the global sell off continued, and the German DAX fell around 2.5 percent early last week.

Germany which exports a large volume of goods to Russia and imports natural gas and energy from Russia. The crisis in Russia could disrupt the economies of the European Union. China also risks losing out economically in the Ukraine, according to reports.

Beijing and Kiev have recently forged a strong commercial relationship - trading corn and military goods. Cautious investors are flocking to safe havens like bonds, gold and the Japanese yen, which have jumped as riskier markets fall.