While Sri Lanka’s apparel exports ended 2024 on a marginal improvement over the previous year, the outlook for 2025 remains cautiously optimistic as exporters would have to navigate challenges from low-cost countries with better market access, a senior official for the Joint Apparel Association Forum (JAAF) said.
The strengthening rupee against the US dollar in the recent times when currencies of competitors are weakening is another hurdle that exporters have to face in achieving export targets.
The Sri Lankan rupee appreciated by 8.2% against the US dollar during the year up to September 30, 2024. However, the currency depreciated by one percent against the greenback this year up to January 10.
The appreciating rupee has for example led to increased wage costs in USD by 35 to 40% considering the increments that the industry has given employees in that period, a media release from JAAF stated.
The Apparel Association Secretary General, Yohan Lawrence said, while the industry is fully aligned with the Government’s goal to grow exports in the near term, it’s important to recognise that such a change will only be possible if the country creates an environment to attract investors to expand and new investments from local and overseas investors.
“The industry will face opportunities and challenges and on the opportunity side, growing global demand for sustainable and ethically produced apparel aligns with Sri Lanka’s strengths in high-quality and eco-friendly manufacturing. Emerging markets, alongside established ones, offer avenues for expansion,” Lawrence said.
He said that strengthening supply chain resilience, focusing on technology and improving workforce skills will be the key to sustaining growth and enhancing competitiveness in the evolving global market.
While being pleased with the growth in exports in 2024, the apex body steering Lanka’s apparels to be the leading sourcing destination for apparels said that Sri Lanka is yet some way off the 2019 (pre-Covid) level of US$5.3billion.
The industry body also noted that global demand for apparel remains weak and excess supply over demand continues to force pricing down.
Apparels ended 2024 with exports in the region of US$ 4.75billion compared to exports of USD 4.5 billion in 2023.
However, the release stated that in 2024 factories did regain some momentum through innovation, sustainability initiatives and strategic partnerships, turning a previously sluggish period into one of marginal growth and renewed global competitiveness.
On the scope and potential for export markets to expand, Lawrence said accounting for around 40% of our apparel exports, the US is our single largest market and continues to be a steady and crucial destination for Sri Lanka’s garment exports.
“The US market has a promising potential for growth through a number of areas. Transparency and traceability for example is one of the key factors that Sri Lankan suppliers bring to the table, for our customers to know not just which factory made their clothes but also to provide with certainty, the sources of their raw materials, the dyes and chemicals used in the manufacture of the fabric and the source from where the yarn is obtained,” he said adding, that it allows customers to have visibility of the complete supply chain allowing them to meet the US CBP legislation.
According to data, Sri Lanka’s apparel exports are generally focused on the US, the EU and the UK who together account for some 85% of our exports. There is potential to grow in other non-traditional markets as well, if we secure market access on a similar basis to our competitor countries.
With regard to the political crisis in Bangladesh and its trickle down benefits to Sri Lanka, Lawrence said while there has been some spillover from Bangladesh Sri Lanka has not been the main beneficiary of reduced volumes in Bangaldesh.
Based on the data to JAAF, in the nine months to September 2024, Bangladesh’s exports of apparel to the USA fell 5% against the corresponding period in 2023. Sri Lanka’s exports to the USA also fell in that period by 3%.
In contrast, however, countries such as China, India, Vietnam and Cambodia had increased exports to the USA during the corresponding period. Sri Lanka is not really able to compete on pricing with Bangladesh and any gains would have been short term precautionary measures taken by Brands. That said, Sri Lanka’s commitment to quality, ethical manufacturing and timely deliveries enabled it to support global demand, fostering growth in exports without directly competing for market share. This strengthened Sri Lanka’s position as a dependable sourcing partner during a turbulent time.
