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Exports

Sri Lanka's Export Growth Masks Underlying Challenges

Strategic Insights

— 1 min read

Sri Lanka's merchandise exports have shown a remarkable growth of 7.2% in 2024, reaching $12,772 million. However, this growth comes amidst a widening trade deficit, which expanded from $4.9 billion in 2023 to $6 billion in 2024. The terms of trade have also experienced a significant decline since 2021, indicating a weakening purchasing power of exports. The export unit value index has declined, suggesting that revenue gains stem from quantity rather than value per unit. This downward trend highlights structural vulnerabilities in the export sector, making the country increasingly vulnerable to external price shocks and market volatility.

Key Takeaways:

  • Sri Lanka's merchandise exports grew by 7.2% in 2024, reaching $12,772 million.
  • The trade deficit expanded from $4.9 billion in 2023 to $6 billion in 2024.
  • Sri Lanka's terms of trade have declined significantly since 2021, indicating a weakening purchasing power of exports.
  • The export unit value index has declined, suggesting that revenue gains stem from quantity rather than value per unit.
  • The country is increasingly vulnerable to external price shocks and market volatility due to the downward trend.
  • Sri Lanka's export sector is experiencing structural vulnerabilities, making a shift towards a more value-driven export strategy essential for long-term competitiveness.
  • Promoting value addition, strengthening national quality infrastructure, and branding and market diversification are key policy measures to address the decline in the export unit value index.
  • The country should establish a robust export intelligence system to monitor commodity prices, global demand trends, and competitor strategies.

Statistics:

  • Merchandise exports grew by 7.2% in 2024, reaching $12,772 million.
  • The trade deficit expanded from $4.9 billion in 2023 to $6 billion in 2024.
  • Sri Lanka's terms of trade have experienced a decline since 2021, with the index remaining below 100.
  • The export unit value index dropped from 82.7 in 2023 to 79.7 in 2024.
  • The downward trend in the export unit value index suggests a growth in merchandise export revenue driven by higher export volumes rather than improved prices.

Sources:

  • Table 01: Sri Lanka's Merchandise Trade (2023-2024)
  • Figure 01: Sri Lanka's Terms of Trade Index (2021-2024)
  • Figure 02: Sri Lanka's Export Volume and Unit Value Index (2023-2024)

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