• Thu. Jul 11th, 2024

Exporters turn less pessimistic on economic outlook despite expected revenue slowdown in 2023


In terms of the outlook for 2023 and in particular the first half of 2023, export firms have turned more optimistic in their views on the economy relative to six months ago, according to the fourth Export Barometer Survey conducted by The Ceylon Chamber of Commerce.

Earlier 43 percent of exporters expected a severe contraction of the economy this year, however, it has fallen to 19 percent while 25 percent of exporters are expecting a moderate economic contraction for the year.

The survey revealed that 55% of exporters experienced a decrease in capacity utilization during the second half of 2022. This is a significant fall compared to the first half of 2022 (left graph below). The outlook for the first half suggests that capacity will continue to be underutilized.

The survey, which covers the second half of 2022 and the outlook for the first half of 2023, revealed that
the fall in export orders led to significant underutilization of capacity within the export sector, which is
expected to continue into 2023.

Exporters stressed that the negative image of the country and domestic regulation were key challenges
for them during the second half of 2022. Firms had to focus their attention on retaining existing clients
that were looking to move to competitor countries due to the negative perception of the country. As
such, the thrust of finding new buyers and venturing into new products and services was limited.


Domestic regulations such as import restrictions and clearance delays at the port were cited as some of
the domestic constraints. The most concerning factor however is related to labour, where higher
labour attrition was recorded compared to the past survey due to migration could lead to skills shortage
in the medium to long-term.


SMEs who were 71% of the respondent firms stated that the foreign exchange crisis hampered their
ability to export, due to loss of suppliers or delays by suppliers. SMEs, which comprise the majority of
respondent service exporters, noted a sharp fall in demand for services, which is likely to slow export
growth during 2023. However, it was interesting to note that larger firms saw a greater decline in export
revenue compared to SMEs.


In terms of the outlook for 2023 and in particular the first half of 2023, export firms are more optimistic
in their views on the economy relative to six months ago. However, their outlook on export orders
remains the same, highlighting a likely slowdown in export growth during the first half of 2023. To
counteract the slowdown in exports led by the global slowdown, it will be important to maintain
economic and political stability, continue to provide uninterrupted power supply and assist firms with
market access opportunities.

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