Sri Lanka may lose US$500mn in exports with GSP+ end: report

July 04, 2010 (LBO) – Sri Lanka may lose around 500 million US dollars in apparel exports a year, due to the end of trade concessions from the European Union from August, a media report quoting an industry official said. Sri Lanka’s apparel exports to the United States have been declining steadily over the last few years, while exports have grown to the European Union.

In rupee terms Sri Lanka’s exports to the US fell from 173 billion rupees in 2007 to 147 billion rupees in 2009, with some analysts saying an overvalued rupee against the dollar due to high domestic inflation may be a cause.

Exports to the EU grew from 157 billion rupees in 2007 to 187 billion rupees, making the EU the top buyer of garments. A stronger Euro and sterling pound as well as GSP+ was believed to have helped trade with the EU.

Sri Lanka’s central bank has said stable economic conditions including low inflation and interest rates, end of a war which reduces war risk insurance costs and increases in productivity at firm level will help Sri Lanka overcome the loss of GSP+ benefits.

Sri Lanka’s inflation fell to 4.8 percent in June, down from 5.3 percent in May, though the index rose 0.8 percent in the month.

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