Exports cross $ 10 b record as services offset merchandise weakness

EDB Chairman and CEO Mangala Wijesinghe

Total exports reached a record $ 10.48 billion in the first seven months of 2026, up 5.48% year-on-year (YoY), putting the country just past the halfway mark of its ambitious $ 20 billion full-year export target despite mounting global and geopolitical headwinds.

The latest performance, disclosed by the Sri Lanka Export Development Board (EDB), surpassed the previous January-July record of $ 9.94 billion set last year, with the expansion increasingly being driven by services as merchandise exports come under pressure.

Merchandise export earnings rose 5.05% to over $ 8.18 billion, while services exports were estimated to have increased 7.02% to $ 2.29 billion.

At the current pace, Sri Lanka has achieved around 52% of its $ 20 billion 2026 export target in seven months. The Government is targeting merchandise exports of more than $ 15.7 billion and services exports of $ 4.3 billion for the full year.

The headline performance, however, conceals a widening divergence between the two components.

Merchandise exports fell 1.3% YoY in July to just over $ 1.28 billion, while services exports surged 20.07% to $ 351.95 million. Total exports for the month nevertheless rose 2.63% YoY to over $ 1.63 billion, although this represented a 1.28% decline from June 2026.

Addressing the media yesterday, EDB Chairman and CEO Mangala Wijesinghe described the July and seven-month performance as a demonstration of the resilience of Sri Lanka’s export sector, but stressed that the record should be viewed as a foundation rather than an endpoint.

“The EDB’s immediate priorities, are to increase export earnings, diversify markets, strengthen emerging sectors, support SMEs, attract investment and improve the global competitiveness of Sri Lankan products and services,” he said.

He said several non-traditional and higher-value merchandise categories posted strong gains during the first seven months. Coconut-based products increased 10% to $ 726.64 million, rubber-based products rose 4.92% to $ 579.55 million, processed food and beverages jumped 19.23% to $ 405.23 million, spices and concentrates increased 14.32% to $ 280.49 million, while electrical and electronic components surged 57.69% to $ 377.91 million

However, he acknowledged that the country’s two major traditional export pillars; apparel and tea continued to face significant headwinds.

Apparel remained the largest contributor to merchandise exports during the first seven months, but earnings fell 6.5% YoY to over $ 2.87 billion. 

“This is primarily due to weaker global demand for apparel. However, this is not a challenge faced by Sri Lanka alone; apparel-producing countries across the world are experiencing a similar situation,” he said, adding that EDB expects conditions to improve over the remaining five months and is still targeting $ 5 billion in apparel export revenue for the year.

Tea exports were hit more directly by the geopolitical disruption in the Middle East. Earnings declined 7.53% YoY to $ 817.53 million, with bulk tea exports falling 9.89% and tea packets declining 7.01%.

“Around 35% of Sri Lanka’s tea exports are destined for Middle Eastern markets, making the sector particularly vulnerable to disruptions in shipping routes, higher freight and insurance costs and logistical constraints. Those pressures also spilled into spices, processed food and beverages, seafood, vegetables and fruits and nuts in July,” he said responding to queries.

On the services side, meanwhile, the performance was considerably stronger during the first seven months. ICT/BPM exports rose 14.54% YoY to $ 1.02 billion, financial services increased by 8.12% YoY to $ 29.94 million and transport and logistics registered a 3.37% YoY increase to $ 1.18 billion. However, construction sector reflected a decline of 25.81% YoY to $ 57.72 million.

The geographical performance was similarly mixed, but showed signs of diversification. The US remained Sri Lanka’s largest merchandise export market, accounting for about 22% of total merchandise exports. Exports to the US fell marginally by 0.58% to $ 250.87 million in July, while cumulative exports declined 1.10% YoY to $ 1.7 billion.

India, however, strengthened its position as the second-largest destination, overtaking the UK. Exports to India jumped 36.16% YoY to $ 688.47 million during January-July, with July exports also rising 9.12% to $ 129.51 million.

This contrasted sharply with the UK, where exports fell 11.34% to $ 72.14 million in July and declined 10.23% YoY cumulatively to $ 434.44 million.

The European Union, which absorbs around 25.5% of Sri Lanka’s merchandise exports, also remained under pressure. Exports to the bloc fell 14.59% in July, although the cumulative decline was limited to 0.50% YoY, with earnings at around $ 1.76 billion.

Among the top 15 export destinations, India, Türkiye, Japan and Mexico recorded YoY growth both in July and cumulatively during the first seven months.

The record seven-month result therefore provides a stronger base for the Government’s $ 20 billion ambition, but the remaining challenge is substantial.

Sri Lanka needs roughly $ 9.52 billion in additional export earnings during August-December to reach the target, an average of about $ 1.90 billion a month, compared with the $ 1.50 billion monthly average achieved during the first seven months.

This indicates the country will need to accelerate export growth significantly in the final five months, particularly if weakness in apparel and tea persists and geopolitical disruptions continue to affect merchandise trade.

“Our objective is to create a stronger, competitive, and more diversified export economy for Sri Lanka. With the continued commitment of our exporters and the strong support of the Government and all relevant institutions, I am confident that we can achieve our national export ambitions,” Wijesinghe said. (CdeS)