Sri Lanka’s export sector delivered a moderate but steady performance in 2025, posting a 5.6% year-on-year expansion and generating total earnings of $17.25 billion. At first glance, the figures signal resilience amid lingering global uncertainty. A closer look, however, reveals that the growth remains heavily concentrated in a few traditional sectors and markets, raising questions about the durability of this recovery.
Merchandise exports climbed by over 6%, led by apparel, tea, coconut-based products, electronics, and food and beverages. Apparel continued to dominate export earnings, surpassing $4.9 billion, with strong demand from the US and the European Union. The EU alone accounted for nearly a quarter of Sri Lanka’s merchandise exports, buoyed by gains in Germany, Italy, and the Netherlands.
Coconut-based exports emerged as the standout performer, recording an exceptional growth of over 42%. Value-added products such as coconut oil, cream, and milk powder drove this surge, highlighting the potential of agro-processing when global demand aligns with domestic capacity. Food and beverage exports also showed robust growth, largely due to increased processed food shipments.
Services exports including ICT/BPM, logistics, and construction expanded more modestly, growing under 3% overall. While ICT/BPM exports rose close to 9%, December figures showed volatility, underlining the sector’s sensitivity to global demand cycles.
Despite the positive headline numbers, cracks are visible beneath the surface. Several export sectors recorded notable contractions. Rubber-based exports declined by over 5%, spices and essential oils slipped due to a sharp fall in pepper exports, and ornamental fish exports continued their downward trend. Even tea, one of Sri Lanka’s most iconic exports, saw significant monthly volatility, with a steep decline in December earnings.
Geographically, export performance remains heavily dependent on a narrow group of markets. The US retained its position as Sri Lanka’s single largest destination, absorbing nearly a quarter of merchandise exports. India moved into second place with double-digit annual growth, yet monthly data showed fluctuations, reflecting vulnerability to policy and price changes.
Government targets for 2025 fell short, with export earnings reaching just under 95% of the $18.2 billion goal. Authorities attribute the shortfall to external shocks, while projecting an ambitious $20 billion target for 2026. Achieving this would require sustained double-digit monthly growth a challenging task without deeper structural reforms.
Ultimately, while Sri Lanka’s export sector demonstrated resilience in 2025, its performance continues to rely on a familiar formula. Without addressing productivity gaps, market concentration, and sectoral imbalances, export growth risks remaining steady but shallow.
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