According to the data, export earnings, after a brief period of considerable growth compared to the previous year, are currently showing a declining trend. According to Export Development Board figures, the export earnings from apparel and textiles, the second highest foreign currency earner, have decreased by 20.5 percent year-on-year in October 2023 compared to October 2022. Also, according to the same source, exports of general merchandise have declined by 10.91 percent compared to the value recorded in August 2022.
At this juncture in the country’s economy, export earnings play a pivotal role in the balancing act of the troubled economy of Sri Lanka. The promotion of exports stands as a crucial pillar for Sri Lanka’s economic recovery and sustained growth.
In the wake of various challenges and setbacks, including the impact of the Covid-19 pandemic, followed by the political turmoil that prevailed in 2022, enhancing and expanding export-oriented strategies becomes imperative for steering the country towards an economic resurgence.
The enormous trade deficit or negative balance of trade creates substantially critical setbacks for the Sri Lankan economy. As per the experts, if the country continually runs a trade deficit at the current levels, other countries can acquire funds to buy up capital in the country, a dangerous trend. Through this process, in the long run, foreign investors will eventually own a sizeable portion of the country’s economic resources.
On the other hand, export promotion initiatives offer a pathway to diversify Sri Lanka’s economy. The country’s overreliance on specific industries makes it susceptible to external shocks. By exploring new markets and products, Sri Lanka can reduce its dependency on a limited range of sectors, enhancing its economic resilience.
The country is at a crossroads on foreign exchange and trade balances. The ongoing high trade deficit or negative balance of trade creates substantially critical setbacks for the Sri Lankan economy.
Therefore, a robust export sector is essential for earning foreign exchange, sustaining imports and stabilising the country’s balance of payments. A positive trade balance achieved through export promotion can strengthen the country’s economic stability.
Increased production
Not only unemployment but also employment layoffs due to the ongoing economic crisis are a burden to the country’s economy. The skyrocketing cost of living causes the public immense hardship.
In this context, expanding exports typically lead to increased production, subsequently generating employment across various skill levels. This job creation is crucial for addressing Sri Lanka’s prevailing unemployment concerns and improving the livelihoods of its citizens.
Market access in international trade refers to the ability of businesses and countries to enter foreign markets by overcoming trade barriers, including tariffs and non-tariff barriers. It is crucial for expanding commercial activities, diversifying revenue sources and stimulating economic growth. Developing exports offers the country several benefits, including increased sales opportunities, revenue growth, diversification of markets, job creation and access to new technologies and knowledge from global partners.
At these crucial times, foreign investment can help diversify the domestic economy by introducing new industries and products. This can help reduce reliance on a single industry or export market, which can make the economy more resilient to external distress.
Strong export sector
A strong export sector can attract foreign investors, showcasing Sri Lanka as an attractive destination for foreign direct investment (FDI). A country with a successful track record, despite all the recent drawbacks, exports a conducive business environment, further stimulating economic growth.
Foreign investment can help diversify the domestic economy by introducing new industries and products. This can help reduce reliance on a single industry or export market, which can make the economy more resilient to external shocks.
However, the government must more carefully focus on important factors such as reworking a robust and lasting trade policy, improving logistics and facilitation, avoiding policy uncertainty, offering competitive and innovative export products and addressing labour-related issues to attract more foreign investments.
It is known that the export potential of other products in Sri Lanka needs to be looked at immediately to bridge the gap in lost revenue from apparel exports. Although the disparity between the revenue of apparel and other products is heavy, with the advantage of the reputation Sri Lanka has earned for export commodity quality, a sizeable market share of the global demand for other exportable products can be captured through effective and vibrant promotion campaigns.
Minor export crops are known to possess higher quality than many other competitors in the global market. This can be a force to reckon with in the world market if promoted properly. Export agricultural products such as pepper, cinnamon, cloves, cardamom, coffee and cocoa that have huge world market demand can be some of the marketable products. Even though currently all these products are exported, research reveals that Sri Lanka supplies a fraction of the world’s requirements and that a lot more buyers can be attracted.
Market diversification
Both authorities and exporters must concentrate more on market diversification, which can lead to higher growth. Sri Lanka should diversify their exports since this can, for example, help them overcome export instability or the negative impact of terms of trade in primary products. Diversifying export markets beyond traditional destinations is vital. Targeting emerging economies and aggressively promoting Sri Lankan products and services globally will help expand market reach.
The country needs to move beyond traditional sectors such as textiles and tea by diversifying its export portfolio more aggressively. This involves promoting value addition within existing sectors and exploring new high-value export opportunities in areas such as technology, agriculture and services.
As one of the most resilient sectors for earning forex, the authorities must provide more developed facilities such as transportation, logistics and port facilities that are crucial for enhancing the export ecosystem. Efficient infrastructure, which reduces lead times, transportation costs and trade barriers, can make Sri Lankan products more competitive in the global market.
Promotion of exports stands as a decisive strategy for Sri Lanka’s economic recovery and long-term growth. By diversifying its economy, earning foreign exchange, creating employment, fostering innovation and integrating into global markets, Sri Lanka can revitalise its economy and position itself as a competitive player on the global stage. Addressing challenges and implementing comprehensive export promotion strategies is a key to unlocking the country’s full export potential and achieving sustainable economic prosperity.
