How Sri Lanka’s Export Sector Is Gaining Global Momentum in 2025

By Dilum Stembo, Managing Director, M&M Militzer & Muench Pvt Ltd

Sri Lanka’s export sector is making headlines in 2025, not just for its resilience in the face of recent economic challenges, but for its clear momentum in global trade. The numbers tell a compelling story: in the first four months of 2025, total exports rose to $5.5 billion, marking a 6.9% increase over the same period last year. Merchandise exports climbed by 6.86% to $4.33 billion, while services exports—including logistics and transport—grew by 7.06% to $1.19 billion.

Monthly data reveals a pattern of steady improvement. March 2025 was especially strong, with total exports reaching $1.5 billion, up 6.24% year-on-year and 11.76% from February. Even with seasonal dips in April, the overall trend remains positive.

Key Markets and Expanding Horizons

The United States continues to be the largest single market for Sri Lankan goods, absorbing 23% of merchandise exports. However, India is now a close contender, having overtaken the UK as the second-largest destination for Sri Lankan goods in some months. Exports to India surged by 36.59% in April and by 39.69% from January to April, while shipments to Pakistan jumped by 56.28%.

Other notable markets include Germany, the Netherlands, France, and China, all of which showed positive growth in both March and the first quarter of 2025. Sri Lanka’s exports to the United Arab Emirates, for example, totaled $341 million in 2024, with tea, spices, apparel, and edible fruits among the top products.

Product Diversity and Value Addition

Sri Lanka’s export portfolio is diverse. Apparel and textiles, tea, coconut products, spices, and food and beverages are all showing growth. In the first quarter of 2025, apparel and textile exports increased by 11.09% to $1.38 billion. Tea exports rose by 4.56%, coconut products by 26.44%, spices and concentrates by 71.43%, and food and beverages by 9.59%. These gains are not just the result of favorable market conditions but also reflect deliberate efforts to add value and innovate.

Sri Lankan exporters are increasingly focusing on processed foods, organic teas, and specialty apparel. This shift is supported by investments in research and development, quality control, and branding, which help Sri Lankan goods stand out in competitive international markets.

Logistics and Transport: The Backbone of Export Success

The logistics and transport sector is a critical part of this success. Earnings from logistics and transport services increased by 12.66% year-on-year in April 2025. Sri Lanka’s strategic location in the Indian Ocean and its well-developed port infrastructure—especially Colombo—make it a natural hub for transshipment and regional trade. Investments in digital customs platforms and multimodal transport solutions have improved efficiency and reduced transit times, supporting the export sector’s competitiveness.

Economic Context and Ongoing Challenges

Despite this positive momentum, challenges remain. The trade deficit widened in early 2025, with imports outpacing exports and the deficit reaching $717.5 million in April, up from $557.7 million a year earlier. The World Bank projects Sri Lanka’s economy to grow by 3.5% in 2025, but growth is expected to moderate due to lingering effects of the recent economic crisis and structural impediments. External debt remains a concern, though recent debt restructuring and an improved credit rating—Fitch upgraded Sri Lanka to ‘CCC+’—have restored some international confidence.

Foreign direct investment has also shown signs of recovery, with inflows reaching $218.6 million in December 2024, up from $51.2 million the previous month. This renewed interest from international investors could further support export-oriented industries.

Market Diversification and Strategic Priorities

Looking ahead, Sri Lanka’s export sector is well positioned to maintain its growth trajectory. Market diversification is a clear priority, with exporters expanding their footprint in South Asia and the Middle East. The growth in exports to India, Pakistan, and the UAE reflects the country’s ability to adapt to changing regional demand and leverage existing trade agreements.

Innovation and Digitalization in Export Logistics

Product innovation and value addition are also key drivers of export growth. The logistics sector’s performance is closely tied to export success. Continued investment in port infrastructure, digital customs systems, and multimodal transport solutions will be essential to maintain Sri Lanka’s competitiveness as a regional trade hub. The adoption of digital platforms for tracking shipments, managing documentation, and optimizing routes is helping exporters reduce costs and improve reliability.

Sri Lanka’s export sector benefits from proactive policy measures, including trade facilitation initiatives, export promotion programs, and efforts to streamline customs procedures. These measures have helped reduce administrative burdens and improve the ease of doing business for exporters.

Sri Lanka Export Performance: Data Snapshot (2024–2025)

Sri Lanka’s Export Competitiveness

Sri Lanka’s export sector has demonstrated remarkable resilience in the face of global economic uncertainty and domestic challenges. The country’s ability to diversify its export markets, innovate in product offerings, and invest in logistics infrastructure has been central to its success.

The logistics and transport sector plays a vital role in this equation, connecting Sri Lankan producers to international buyers and ensuring the timely delivery of goods. The sector’s strong performance in early 2025 is a positive sign for the future, but continued investment and policy support will be essential to sustain growth.

Sri Lanka’s export outlook for the remainder of 2025 and beyond is cautiously optimistic. While challenges remain—including the need to manage the trade deficit and address structural economic issues—the export sector is well positioned to drive economic recovery and contribute to long-term prosperity.

Looking Forward: The Road Ahead for Sri Lankan Exports

The coming years will be critical for Sri Lanka’s export sector. Maintaining momentum will require a focus on market diversification, product innovation, and logistics efficiency. The country’s strategic location, combined with ongoing investments in infrastructure and digitalization, provides a solid foundation for future growth.

Sri Lanka’s exporters have demonstrated their ability to adapt to changing global conditions and seize new opportunities. With the right policies and continued support from the logistics sector, Sri Lanka can build on its recent successes and secure its position as a competitive player in international trade.

Article written by

Dilum Stembo

Managing Director, M&M Militzer & Muench Pvt Ltd, a member of the Freyt Consol Network

Freyt Consol is a global network for LCL consolidators and NVOCCs dedicated to excellence and long-term growth. We create an environment where members thrive by collaborating with trusted partners and accessing essential resources.