Sri Lanka’s apparel exports fell sharply in February, reflecting a broader slowdown in global demand that is weighing on garment-producing economies across South Asia.
Exports dropped 11.46% year-on-year to $361.2 million in February, according to data from the Joint Apparel Association Forum (JAAF), marking one of the steepest monthly declines in recent years and signalling growing pressure on the country’s largest export sector.
The contraction was led by a sharp fall in demand from Europe, where shipments declined 19.48%, while exports to other markets dropped 18.54%. The United States and United Kingdom recorded more moderate declines of 3.53% and 5.67%, respectively.
The February figures follow an earlier slowdown at the start of the year. In January, exports had already fallen 2.66% year-on-year to $425.44 million, highlighting what industry groups describe as continued volatility in global apparel demand.
Taken together, Sri Lanka’s apparel exports declined 6.91% in the first two months of 2026 compared with the same period last year, suggesting the downturn is not a one-off event but part of a broader demand correction.
Industry representatives say the decline reflects weakening consumer demand in key markets rather than country-specific challenges.
“The current decline in exports reflects a broader softening in global demand, particularly in Europe,” JAAF said, noting that similar trends are visible across competing apparel-exporting nations.
Bangladesh, one of Sri Lanka’s main regional competitors, reported a 25% drop in apparel exports to the European Union in January, reinforcing the view that demand pressures are widespread across global sourcing hubs.
Analysts say the European market has been particularly affected by subdued consumer spending, high inventory levels among retailers and ongoing economic uncertainty, leading to reduced order volumes.
Also read: Sri Lanka Apparel Exports Slide in US and EU as January Demand Stays Uneven
At the same time, buyers are becoming more selective in sourcing decisions, increasing competition among suppliers in Asia.While global demand remains the primary driver of the decline, industry experts note that Sri Lanka’s competitiveness is also shaped by domestic constraints.
These include relatively higher production costs, logistical inefficiencies and compliance-related expenses, which can limit flexibility in a price-sensitive market.
“In a more competitive environment, domestic constraints become more critical,” JAAF said, emphasising the need to improve logistics efficiency, maintain cost competitiveness and strengthen market access.
Sri Lanka’s apparel sector is a cornerstone of the national economy, accounting for a significant share of export earnings and employing hundreds of thousands of workers, many of them women.
The industry has built a reputation for ethical manufacturing and compliance with international labour standards, positioning itself as a preferred sourcing destination for global brands. However, rising competition from lower-cost countries and shifting buyer priorities are increasingly testing that position.
Despite the overall decline, market performance has been uneven.
The UK market has shown relative resilience in recent months, supported in part by the introduction of the Developing Countries Trading Scheme (DCTS), which eases rules of origin and allows Sri Lankan manufacturers greater flexibility in sourcing inputs.
Similarly, changes in U.S. tariff structures—such as the introduction of a uniform 10% temporary tariff, have provided some degree of pricing predictability for exporters, although demand remains subdued.
These policy shifts highlight how trade frameworks can influence competitiveness, even as broader demand conditions remain weak.
The downturn in Sri Lanka’s exports mirrors trends across the wider South Asian apparel industry, where countries such as Bangladesh, India and Pakistan are also experiencing softer demand.
At the same time, competition is intensifying as buyers diversify sourcing strategies, seeking cost efficiencies and supply chain resilience.
Industry observers say this environment is accelerating the need for exporters to move up the value chain, focusing on higher-margin products, innovation and sustainability.
Sri Lanka has already signalled its intention to transition towards higher-value apparel segments, leveraging its reputation for quality and ethical production to offset volume declines.
