Sri Lanka's oscillating trade costs and its low trade-to-gross domestic product (GDP) ratio between 2016 and 2024 suggest ample scope to integrate further into the global economy by slashing its sizable barriers to import competition, diversifying its export base, expediting the implementation of trade facilitation initiatives and improving its physical connectivity, according to the World Trade Organisation (WTO).

In its fifth review of the trade policies and practices of Sri Lanka, WTO said boosting the country’s productivity and competitiveness would also require invigorating domestic market competition by addressing regulatory gaps and reducing state-owned enterprises' economic footprint.

“A financial system with significant credit exposure to the public sector, infrastructure bottlenecks and a complex and unpredictable tax regime continue to constrain private enterprise, particularly small-scale businesses. Sri Lanka also continues to face challenges related to its sizeable informal sector and persistently high female and youth unemployment rates,” a WTO release said citing the review report.

Sri Lanka remains heavily dependent on imports of certain essential inputs. Its merchandise exports continue to be dominated by textiles, apparel, and tea, translating in an export concentration index that remains at nearly twice the average level for Asian developing economies, despite a 13-per cent decrease between 2016 and 2024, it added.

Fibre2Fashion News Desk (DS)