The apparel manufacturing sector, which has long been the backbone of Sri Lanka’s economy, is currently in a critical situation, with small and medium-sized enterprises (SMEs) being hit the hardest by the crisis. According to the latest market monitoring reports, the island nation’s garment export value reportedly dropped by around 8 percent in the first quarter of 2026 compared to the same period last year. This sharp decline exposes a major vulnerability in the country's primary foreign exchange-earning sector amidst weakening global demand and high geopolitical uncertainty.
The INdonesia government's plan to provide a low-interest credit facility of 6 percent for a machinery modernization program has been welcomed positively by national textile and footwear industry players. The policy is considered a vital boost for labor-intensive industries to improve production efficiency, productivity, and competitiveness amidst the pressure of imported products and challenging global market conditions. The credit program will target the textile, footwear, and several other manufacturing industries through a financing scheme channeled by the Indonesian Export Financing Institution (LPEI).
China’s digital fashion market, long hailed as the global pioneer of e-commerce innovation, is currently grappling with a destabilizing paradox: record-breaking sales volumes are yielding razor-thin or even negative profits. At the heart of this crisis is a staggering surge in apparel returns, particularly in womenswear, where return rates are now nearing 80 percent—a massive leap from the 30 percent seen in 2019. What was once considered a minor cost of customer service has mutated into a "return tax" that threatens the entire value chain.
The Sri Lankan garment industry, long considered the backbone of the island nation’s economy, is navigating a turbulent start to 2026. According to the latest 'External Sector Performance' report released by the Central Bank of Sri Lanka, garment exports plummeted by 8.2 percent during the first quarter of the year. Revenue dropped to $1.17 billion between January and March, a stark decline from the $1.28 billion recorded during the same period in 2025.
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