Tough times loom on Sri Lankan garment sector

09 Oct '12

2 min read

Tough times seem to be looming on the Sri Lankan garment sector as European Commission (EC) has forewarned of a further decline in value of Sri Lankan rupee in terms of US dollar.

Additionally, the Sri Lankan garment exports have now started feeling the pinch of suspension of the EU’s Generalized System of Preference (GSP) Plus trade facility.

Roshan Lyman, Head of the European Commission trade delegation, said withdrawal of the GSP Plus facility did not impact Sri Lankan garment trade initially, as owing to civil unrest in Bangladesh European buyers had no option but to buy Sri Lankan apparels. However, the domestic industry has now started feeling the real impact of suspension of the facility.

Speaking at a seminar held by the EC to ponder on the Eurozone crisis and its impact on the Sri Lankan economy, Dr. Dilesh Jayantha, Economic Advisor to the European Chamber of Commerce, cautioned that over the next six months the exchange rate is likely to stabilize at around Lk Rs. 138 per one US dollar. In comparison, the dollar traded at around Lk Rs. 114 at the start of the year.

Dr. Indrajit Coomaraswamy, a former Director of Economic Affairs Division at the Commonwealth Secretariat and also an ex-employee of the Central Bank of Sri Lanka and the Finance Ministry, also supported Dr. Jayantha’s statement.

Sharing his views on ongoing development in the money market, Dr. Coomaraswamy condemned recent issuance of an international bond and said that efforts to stabilize the exchange rate through state intervention and by inviting international borrowings would have its own implications.

All the three experts emphasized that concrete measures were inevitable for putting the Sri Lankan economy back on track.

Fibre2fashion News Desk - India