Sri Lanka's apparel industry, which constitutes the country's largest industrial export, is bracing for a significant decline of up to $1 billion this year, as global demand continues to slow down, warns a top industry expert, as reported by Reuters.

The industry earned $5.95 billion in 2022, playing a crucial role in pulling Sri Lanka through its worst financial crisis since independence. However, the sector is struggling in the first quarter of 2023, with a 13.8% drop in textiles and garment exports to $1.3 billion, according to the country's central bank. Additionally, exports in March hit a three-year low.

Yohan Lawrence, Secretary General of the Joint Apparel Association Forum (JAAF), says that the current slowdown in demand could result in a $1 billion reduction in exports this year. The United States, the largest buyer, saw shipments drop 22% to $470 million, while exports to the European Union fell 13% to $344 million. The industry's competitiveness has also been impacted by a 66% power tariff hike in February.

Garment exports from Sri Lanka declined by 18.8% in January 2023, standing at $388.9 million compared to $478.9 million in the same period last year, according to statistics released by the Central Bank of Sri Lanka. Textile exports in January 2023 also fell by 1.2% year-on-year to $27.4 million, with exports of other made-up textile articles down 14.6% at $8.1 million, according to the central bank’s report titled ‘External Sector Performance’. Overall, 54.28% of all industrial exports from Sri Lanka during the period consisted of Textiles, garment, and other made-up textile articles’ exports, totaling $424.4 million and down 17.8% from the same period last year.

On the other hand, imports of textiles and textile articles dropped by 31.3% to $217.5 million, while clothing and accessories imports went down by 20.3% to $18.2 million during January 2023, according to the same report.