The apparel industry is facing a challenging year in 2023 as apparel exports in January hit a five-year low, raising industry concerns.

The January 2023 performance of apparel exports amounted to $396.6 million, down 18.6% from the previous year, falling below the previous low of $397.61 million in 2021. The industry's best January performance was in 2019, where exports hit a record $5.3 billion before being overtaken by last year's figures.

In January 2023, apparel exports to the US were down 24% to $162 million from the previous year, while exports to the EU decreased by 19% to $113 million. Shipments to the UK were down 8% to $56.3 million, and other markets decreased by 10% to $65 million. The 2023 January performance marked the fourth consecutive year-on-year monthly decline, although month-on-month figures were somewhat erratic.

The negative growth in recent months can be attributed to higher inventories at both the store and consumer level and high inflation in key markets. In the fourth quarter of 2022, the apparel industry experienced a 15-20% decline in orders. Industry analysts predict that Sri Lanka's apparel exports may continue to decline YoY until the first half of 2023 or beyond.

To increase exports in the short- to medium-term, accessing new markets or expanding into emerging or high-potential markets is crucial. Analysts emphasized the need for the early finalization of proposed Free Trade Agreements. Additionally, Sri Lanka manufacturers and exporters need to manage their costs to improve the country's macroeconomic fundamentals and ease of doing business.

Last week, the apparel industry expressed concern over the 66% increase in electricity tariffs by the government, warning that it was a severe blow to the industry's competitiveness.