16 July 2014
Sri Lanka continued experiencing a double-digit growth of its apparel exports in the first months of 2014, while being however confronted with a more stable currency and surging labor costs. Our statistical tables provide a comprehensive view of latest export trends with detailed EU and US import data per category of products over the first months of 2014.
Sri Lanka's apparel exports continued experiencing a double-digit growth in the first months of the year.
In January-April, total apparel exports gained 23% from the same period in 2013, at US$1.52 billion, according to the apparel industry association.
There was no sign of slowing down shipments, as April exports still rose 24.8% in US$ terms.
In full 2013, apparel exports had already surged 12.9% in US$ terms at US$4.26 billion.
According to data from the Central Bank of Sri Lanka, apparel exports would have increased by 14.4% in rupee terms in the last year, at 551.6 billion rupees.
In US$ like in rupee terms, Sri Lanka therefore experienced a double-digit surge of its apparel exports in the last year, further sharply rising in the first part of 2014.
This is partly due to a dramatic fall of the local currency which plunged in the first months of 2013, but now remains stable.
On July 1st, the rupee had not changed from the same date a year earlier.
In the meantime, labour costs continued sharply rising in the country.
According to official data, nominal wages rose more than 40% from December 2012 to December 2014 in the manufacturing industry, still a jump of 37% in real terms.
Although other Asian countries have experienced a similar surge of their labour costs, Sri Lankan wages were already higher than in other low-cost nations, before last year surging.
In addition to a stabilized currency and surging production costs, apparel exporters will also have to now manage the lower growth in US and EU retail sales, negatively affecting the global clothing market.
Shipments to the US and EU continued however surging in the first four months of 2014 (see our below table), still accounting for a very large share of total exports.
The Sri Lankan industry may actually rely on a niche strategy which has been progressively implemented in the last 10 years.
Focusing on higher-valued products with technical skills in the underwear and lingerie sectors, the domestic producers may easily compete with other Asian nations.
In addition, Sri Lanka began developing a domestic textile industry, after excessively relying on yarn and fabric imports.
In full 2013 for example, textile imports have fallen in volume terms for the second consecutive year, while also declining in rupee terms, whatever the surge in apparel exports.
This is a clear sign that textile investment could further blossom in the country, allowing to develop domestic added value and to continue competing on the global apparel market.
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