Garment exports from Sri Lanka are unlikely to show any growth this year due to increased low-cost competition from other manufacturing countries.

Sales will stay flat at $2.5 billion after crashing 14 per cent last year, with the United States and the European Union accounting for about half the country's exports. Businesses saw a sharp drop in demand last year due to the retail slowdown in the United States, and were also hit by internal strife that included a rebel attack at the country's sole international airport.

"Orders should come back but at a very low price," said Ranjan Casie Chetty, chairman of the Apparel Exporters Association.

Sri Lanka's main competitors are the Caribbean and Africa, which both enjoy duty concessions to the US and the EU. Low-cost production in China has also affected exports.

Government officials are currently seeking a free-trade agreement with the United States and hope duty concessions to the European Union will be approved later this year.