For years, Sri Lanka has looked West for a big part of its revenues. Exports of garments to Europe and North America have been, and will continue to be, essential to its economy, as will Western tourists and remittances from Sri Lankan workers in the Middle East, Europe and North America. However, the Covid-19 pandemic has hit all of these revenue streams hard, and the nation’s economy contracted sharply in 2020. A further effect that Covid-19 has had on Sri Lanka, has been to add impetus to changes that were already taking place – not least a realisation that she cannot rely so much on the Western fashion industry, and that other important opportunities exist – to the East…
Facing in two directions
Sri Lanka’s exports account for 23% of GDP, a full quarter of these being bound for the USA, with the UK following (at 9%), then India, Germany and Italy a few points lower. By contrast, most of her imports (and inward investment) come from Asia – India, China, the UAE and Singapore.
Located on a major shipping route, and so close to India, Sri Lanka’s geographic position gives it an even greater strategic value than its size and population count might suggest. For these reasons, she has been on the receiving end of attention (and investment) from both India and China, especially as China builds its network of worldwide port infrastructure, including the Hambantota deep water port, under the banner of the “Maritime Silk Road” (or whichever of the many related epithets you choose).
Food and services
Looking east, there are growing markets for Sri Lanka’s goods and services. Take Singapore, for instance. Access to food resources is one reason why some Singaporean companies are putting down roots in Sri Lanka – Singapore needs to secure food supply chains from outside its own borders. But more than that, Sri Lanka offers high-cost Singapore opportunities to outsource services efficiently, without becoming overly dependent on her big neighbours – Malaysia and Indonesia.
Solid prospects
In 2019, the World Bank reclassified Sri Lanka from a lower-middle- to an upper-middle-income country (based on GNI per capita). Though Covid-19 precipitated a sharp recession in 2020, analysts forecast Sri Lanka’s GDP to recover by 3-3.5% this year, and 4.5% or more next year. Sri Lanka’s school system has produced one of the highest literacy rates among developing nations, though secondary and tertiary education face the challenge of keeping up with a rapidly changing world. If Sri Lanka can keep adapting, and further harness the opportunities that lie to her east, her prospects for long-term growth look rosy.
Based in Colombo, Sri Lanka, CMC Engineering Export GmbH is a member of the Melchers group, engaged in imports from Europe and Asia of an extensive range of technical products from quality suppliers. Their dedicated, experienced specialists offer industrial materials, machines and spare parts to a wide range of industries
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