The Trade Deficit Falls 24pct in January 2013. Fall in Export Earnings is a Worry

02nd April 2013, www.island.lk

The trade deficit fell 24 percent year-on-year to US$ 780.4 million in January 2013 from US$ 1,026.8 million a year earlier, but the worrisome trend in export earnings continue, with earnings falling 18.2 percent to US$ 726.7 million in January, down from US$ 888.2 million a year ago, data released by the Central Bank yesterday (02) showed.

The import bill fell 21.3 percent to US$ 1,507.2 million with petroleum imports falling 47.6 percent to US$ 269.7 million.

Tea export earnings fell 2.8 percent to US$ 101 million. Garment exports fell 8.9 percent to US$ 333.9 million.

The fall in export earnings is a worry, economists point out.

After growing nearly 100 percent in 2011, the country’s trade deficit declined by 4.1 percent in 2012 to US$ 9,313 million as at end December from US$ 9,710 million a year earlier. Imports fell 5.8 percent to US$ 19,086.5 million while export earnings fell 7.4 percent to US$ 9,773.5 million. Export earnings at 30.58 percent of GDP in 2001, declined gradually to 16.44 percent last year.

Releasing the ‘External Sector Performance review for January 2013 yesterday (02), the Central Bank said: "The trade deficit continued to narrow and recorded a 24 per cent year-on-year decline in January 2013. The policy measures implemented early in 2012 to discourage non-essential imports have continued to ease pressure on the trade deficit and therefore on the current account balance. The policy measures adopted have therefore helped withstand the adverse impact of the slowing down of global demand on exports. Inflows on account of exports of services remained favourable in January 2013, further supporting the current account, while total reserves were maintained at healthy levels, strengthening the overall balance of the BOP.

"Expenditure on imports declined by 21.3 per cent, year-on-year, to US dollars 1,507 million in January 2013, reflecting the effectiveness of the policies introduced early in 2012 to curb import expenditure. Imports of refined petroleum declined by 58.4 per cent, year-on-year, in January 2013, partly due to increased hydro power generation. Lower expenditure on imports of transport equipment, gold and vehicles also made a significant contribution toward the decline in import expenditure in January 2013. However, expenditure on imports of certain intermediate goods such as chemical products, agricultural inputs, plastic and articles thereof and wheat and maize which accounted for about 11 per cent of imports, increased on a year-on-year basis in January 2013.

"Import expenditure on investment goods also declined on a year-on-year basis in January 2013, as imports of transport equipment and machinery and equipment declined. Nevertheless, import expenditure on building materials, categorised under investment goods, increased in January 2013. With respect to consumer goods imports, expenditure on imports of food and beverages as well as non-food consumer goods declined. Vehicle imports, which declined by 51.7 per cent, year-on-year, made the largest contribution towards the
decline in expenditure on consumer goods imports.

"As demand for exports remained fettered by the slow recovery of major export destinations, namely, the EU and the USA, the decline in export earnings continued into 2013. Earnings from exports declined by 18.2 per cent to US dollars 727 million in January, as earnings from all major categories of exports declined, on a year-on-year basis.

"The decline was mainly driven by industrial exports which declined by 20.7 per cent. Earnings from exports of textiles and garments declined by 8.9 per cent. Exports of transport equipment, gems, diamonds and jewellary and rubber products were the other categories of export that contributed significantly to the decline in export earnings. Earnings from agricultural exports declined in January 2013, as a result of earnings from both traditional and non-traditional agricultural exports declining.

"Despite exports of tea continuing to fetch favourable prices, the drop in demand from main markets led to a decline in earnings from tea exports in January. However, export earnings from green tea, although its share remains low, recorded an year-on-year increase. While the price of natural rubber has decreased globally, the decline in volumes of rubber exports could be attributed partly to the demand from local manufacturers of rubber based products.

"Of non-traditional agricultural exports, earnings from the export of spices increased in January 2013, led mainly by the commendable performance of pepper and cloves exports. Further, earnings from the export of unmanufactured tobacco increased marginally in January 2013," the Central Bank said.

Sri Lanka's 2011 Export Earnings Rise by 22.4pct while Imports Up by 50pct Affecting Trade Deficit to Increase by 99.6pct

24th February 2012, www.news360.lk

Sri Lanka’s trade deficit during the year 2011 has jumped to US$ 9.74 billion, an increase of 99.6% over the previous year’s figure of just US$ 4.88 billion.

The country’s total export earnings during the year 2011 has risen by 22.4% year on year to achieve a figure of US$ 10.48 billion, while its import bill has climbed up to US$ 20.23 billion, an year on year increase of 50%.

Out of the total import cost, the country has spent US$ 4.63 billion to import oil while motor cars and cycle imports which falls under the consumer goods imports has cost  US$ 1 billion.

Expenditure on imports of textiles and clothing has amounted to US$ 2.23 billion while gold imports have seen a bill of US$ 604 million.

Sri Lanka also has spent US$ 4.66 billion to import investment related goods to the country.

The country’s export earnings have been backed by exports of textiles and garments which has seen growing by 24.6% year on year to bring in US$ 4.20 billion.

Island nation has seen its tourism sector bringing in US$ 830 million, a 44.2% year on year growth.

Worker remittances to the country during the year 2011 have hit a record mark of US$ 5.14 billion.

Related Info :

• Sri Lanka's Exports in December 2011 Went up 24pct to $ 906mn with Sharp Gains in Textiles & Rubber

Sri Lanka Exports Up and Tade Deficit Widens

06th October 2010, www.news360.lk

Sri Lanka’s trade deficit during the 1st 7 months has widened to 103% to stand at US$ 3.36 billion owing to the import bill which is rising higher than the export earnings.

Importation of consumer goods, intermediate goods and investments good all has increased during this period to incur an import bill of US$ 7.6 billion, which during the same period last year stood at just US$ 5.49 billion.

Petroleum imports has cost the country a bill of US$ 1.89 billion an increase of 77.6% compared to last years reference periods US$ 1 billion.

Motor vehicle imports too has seen a considerable increase during the period.

Meanwhile up to July, export earnings have gone up by 11.4% to earn a sum of US$ 4.28 billion.

Earnings from Agricultural products has seen the biggest increase of 23.5% to contribute US$ 1.09 billion which tea exports along brought in US$ 746 million.

Earnings from tea have seen a growth.

The largest quantum of export earnings came from the industrial sector which has grown by 7.9% to earn a sum of US$ 3.13 billion.

However textiles and Garments which contributed US$ 1.76 billion for the overall industrial earnings has declined by 3.9% during the first 7 months of the year.

Meanwhile up to July this year the country’s worker remittances has increased by 12.5% to stand at US$ 2.14 billion.

The gross official reserves without the Asian Clear Union Funds stood at US$ 5.4 billion equivalent of 5.4 months of imports.

Sri Lanka Exports Up in February Helped by Agricultural and Industrial Exports

11th May 2010, www.dailynews.lk

Sri Lanka’s external sector performance showed signs of improvement along with the gradual recovery of the global economy. Earnings from exports grew by 20.0 percent in February 2010 to US $ 629 million led by higher earnings from agricultural and industrial exports, the Central Bank said yesterday.

The expenditure on imports also increased by 60.6 percent to US $ 973 million, due to the increased demand for imports within all the sub sectors.

Accordingly, the trade deficit expanded to US $ 344 million in February 2010.

Earnings from agricultural exports, which accounted for 27.0 percent of total exports, increased in February 2010, year-on-year, led by tea, rubber and minor agricultural exports.

Tea and rubber, whose export volumes increased by 20.1 percent and 44.1 percent, respectively, continued to fetch higher prices in the international market. Tea prices increased by 25.7 percent to US dollars 4.35 per kg mainly due to the finer quality of Ceylon tea exports and the supply shortages in the international market.

Rubber prices increased to US $ 2.86 per kg, reflecting a 95.4 percent increase compared to February 2009, mainly due to the recovery in international demand. Supply shortages due to the adverse weather conditions that prevailed in the major rubber producing countries in Asia also helped increase the international rubber prices.

Earnings from minor agricultural exports increased due to higher prices fetched by fruits, coffee, and cocoa products and increased volumes of vegetables, arecanuts, cashew and essential oils.

Export earnings from certain spices, such as cinnamon and cloves, increased led by higher volumes and prices.

The industrial exports, which were affected by the global economic crisis, rebounded in February 2010, led by the exports of processed food and beverages as well as rubber products.

Although exports of textile and garments and ceramic products declined in February 2010, year-on-year, they reflect an improvement since January 2010.

All major categories of imports increased in February 2010.

Expenditure on imports of consumer goods increased significantly, with notable increases in food imports such as rice, sugar and wheat.

Expenditure on imports of non-food consumer durables also increased significantly in February 2010. Amongst intermediate goods, expenditure on petroleum imports increased substantially in February, year-on-year, as the average import price of crude oil rose by 71.4 percent to US $ 78.23 per barrel. Import expenditure on fertilizer increased in February 2010, compared with the same period in 2009, mainly due to the substantially higher import volumes.

Imports of investment goods also increased in February 2010 led by higher expenditure on transport equipment, building materials and machinery and equipment, which augurs well for future economic activity. During the first two months of 2010, foreign remittances increased by 13.0 percent over the corresponding period of 2009 to US $ 564 million.

The gross official reserves, with and without Asian Clearing Union (ACU) funds, were at US $ 5,408 million and US $ 5,032 million, respectively, by end of February 2010. Based on the previous 12 months average imports of US $ 921 million per month, the gross official reserves, without ACU funds, were equivalent to 5.5 months of imports.