According to estimates, companies had to lay off workers in an industry that in 2022 contributed 50 per cent of Sri Lanka’s export revenue due to global economic crises that destroyed the demand for garments.
According to the reports, Sri Lanka’s clothing industry contributed nearly half of the country’s export earnings last year after enduring both the Covid pandemic and the crippling economic crisis. However, changes in the global economy have caused a drop in demand, forcing manufacturers to fire hundreds of workers.
One of Sri Lanka’s top export sectors is apparel, which makes products for well-known international companies like Victoria’s Secret, Marks & Spencer, and Nike, among others. The industry brought in around 46 per cent of Sri Lanka’s export earnings last year, or US $ 5.93 billion.
However, industry statistics showed that by March of this year, year-over-year export volumes had decreased by around 11 per cent. This was due to the struggling global economy.
According to Yohan Lawrence, the head of the Joint Apparel Association Forum (JAAF) of Sri Lanka, a substantial decline in demand was caused by softening market conditions in the US, the EU and Britain; concerns about a worldwide recession; and the Russia-Ukraine war. According to data, Lawrence continued, Sri Lanka is losing market share to Bangladesh, its neighbour.
Trade agreements are at the core of this dynamic, since Bangladesh as a least developed country (LCD) holds more preferential trade terms, and could export apparel free of duty to the EU and the UK under the ‘Everything but Arms (EBA)’ trade agreements.
Sri Lanka, however, trades under the Generalised System of Preferences, which comes with conditions based on the rules of origin.
