Economy (2023)
is expected to grow by 1.7% in 2024 after GDP fell 3.1% year-on-year in the second quarter of 2023, marking the sixth consecutive quarter of contraction, as the country continues to battle a financial crisis.
Annual growth rate(2022): -7.8.
Natural resources: Limestone, graphite, mineral sands, gems, and phosphate. Agriculture (16.9% of GDP): Major products--rice, tea, rubber, coconut, and spices.
Industry (17.2% of GDP): Major types--garments and leather goods, chemicals, refined petroleum, wood products, basic metal products, and paper products.

Trade:  Sri Lanka's merchandise exports increased by 6.98 % to US$ 1,091.6 Million in August 2023 compared to July 2023 as per the provisional data released by the Sri Lanka Customs. However, it is a 10.91 % decrease when compared to the value recorded in August 2022; garments and footwear, tea, rubber products, jewelry and gems, refined petroleum, and coconuts. Sri Lanka’s merchandise exports increased by 2.18 % to US$ 1,027.2 Million in July 2023 compared to June 2023 as per the provisional data released by Sri Lanka Customs. However, it is an 11.79 % decrease when compared to the value recorded in July 2022.

a) Products & Services with Positive Growth (Increases)

 Export earnings of Coconut kernel products and Coconut fiber products increased by 3.95 % and 0.92 % respectively in July 2023 compared to July 2022.

Export earnings from Coconut Milk Powder, Coconut cream and Liquid Coconut Milk which are categorized under the Coconut kernel products increased by 41.64 %, 23.05% and 10.16% respectively in July 2023 compared to July 2022.

Being the largest contributor to Coconut based sector, Coco Peat, Fiber Pith & Moulded products which are categorized under the Coconut fibre products, increased by 1.99% to US$ 15.35 Mn in July 2023 in comparison to July 2022.

In addition, export earnings from Spices and Essential Oils increased by 10.68 % to US$ 37.53 Mn in the month of July 2023 compared to month of July 2022 with strong performance in export of Pepper (222.27%).

Moreover, export earnings from Ornamental fish increased by 32.35 % to US$ 1.80 Mn in July 2023 compared to July 2022.

The value of ICT exports is estimated to increase by 45.5 % to US$ 132.25 Mn in July 2023 compared to July 2022. In addition, value of Transport & Logistics services exports is estimated to increase by 26.45 % in July 2023 compared with July 2022.

b) Products & Services with Negative Growth (Decreases)

 Export earnings from Apparel & Textiles have decreased by 22.28 % y-o-y to US$ 427.48 Million in July 2023 compared to July 2022.

In addition, Export earnings from tea which made up 12% of merchandise exports, decreased by 1.97 % y-o-y to US$ 115.2 Mn in July 2023 compared to July 2022. Earnings from export of Tea packets decreased by 1.93 % to US$ 55.49 Mn.

Export earnings from Rubber and Rubber Finished products have decreased by 11.13% y-o-y to US$ 79.31 Million in July 2023, with negative performance in exports of Pneumatic and retreated Rubber Tyres and tubes (-5.76 %) and Industrial and surgical Gloves of Rubber (-25.08%).

In addition, export earnings from the Electrical & Electronics Components decreased by 1.04 % y-o-y to US$ 40.82 Mn in July 2023 with poor performance in exports of Electrical Transformers (-32.13 %).

Export earnings from Seafood decreased by 16.46 % to US$ 17.25 Mn in July 2023 compared to July 2022. This decrease was mainly due to the poor performance in the export of shrimp (-70.51%) and Frozen fish (-4.27%).

On monthly analysis, export earnings of Coconut-based products decreased by 5.67 % in July 2023 compared to July 2022. Moreover, export earnings of Coconut shell products decreased by 31.14 % to US$ 11.52 Mn in July 2023 compared to July 2022. Earnings from Activated Carbon, which is categorized under the Coconut shell products decreased by 30.37 % to US$ 10.64 Mn in July 2023 compared to July 2022.

Sri Lanka’s Export Performance in Major Markets

Out of the top 10 export markets, only UAE has shown strong performance during July 2023 and the period of January to July 2023 compared to the corresponding period in the previous year.

Further, India, UAE, and France have shown strong performance during July 2023 compared to July 2022.

Exports to the United States of America, Sri Lanka’s single largest export destination, decreased 15.60 % to US$ 253.79 Mn in July 2023 compared to July 2022. Further, exports to the United States of America decreased by 18.5 % to US$ 1,620.57 Mn from January to July 2023 compared to the same period in 2022.

Table 2 shows the comparison of Merchandise export performance of the top 15 export markets in July 2023 and January to July 2023 compared to corresponding periods of the previous year.