Exports, imports peak in August

Earnings from exports increased by 7 %to $760 million in August, recording the highest monthly value thus far in 2010, the Central Bank said yesterday.

Cumulative earnings from exports during the first eight months of 2010 increased by 11 % to $5,040 million compared to the corresponding period of 2009. Expenditure on imports increased by 36 % to $1,143 million in August 2010 reflecting substantial increases in all major categories of imports. Cumulative expenditure on imports during the first eight months of 2010 increased by 37 % to $8,670 million compared to the corresponding period of 2009.  As a result, the trade deficit expanded to $3,630 million during this period from $1,782 million in the corresponding period of 2009.

The largest contribution to the growth in exports in August was from the industrial sector, led by a significant increase in exports of machinery and equipment. This comprised mainly of transport equipment such as boats and bicycles and electrical equipment such as electrical transformers, static converters, inductors and insulated cables. Earnings from exports of rubber products and petroleum products have also performed well. However, earnings from exports of food and beverages, textiles and garments, diamond and jewellery and other industrial products declined on a year-on-year basis. At $309 million, earnings from the textiles and garments sector recorded the highest earnings thus far, during the year. Earnings from food, beverages and tobacco exports have declined by 17 % mainly due to the lower exports of fish. Earnings from agricultural exports, which accounted for 23 % of total exports, increased in August 2010 led by higher earnings from exports of rubber and minor agricultural products, which continued to fetch premium prices in the international market. Rubber prices rose by 81 % to $3.27 per kg compared to the same period of 2009. Earnings from minor agricultural exports increased by 21 % mainly due to the higher prices fetched by cardamoms and cocoa products. There were also significant increases in the export volumes of tobacco, cardamoms, sesame seeds and cashew nuts. The average price of tea, however, declined marginally to $4.29 per kg in August 2010. Earnings from coconut exports also declined, in terms of value as well as volumes, compared to August 2009.

Expenditure on imports increased due to higher demand across all three major categories of imports in August 2010. Textile and clothing imports, which are used as an input for apparel exports, increased by 27 % to $152 million in August 2010, reflecting the potential growth in apparel exports in the coming months. The average import price of crude oil increased by 9 % to $73.53 per barrel in August 2010, from $67.52 per barrel in August 2009.

Expenditure on imports of fertiliser also increased in August 2010, compared to the same period in the previous year, mainly due to the substantially higher import volumes. Expenditure on imports of consumer goods rose in August 2010, with significant increases in the non-food category, led by motor vehicles ($60 million) and electrical equipment ($8 million). Expenditure on investment goods increased by 65 % to $264 million in August 2010, reflecting higher growth in all sub categories.

Remittances up 13% to $ 2.47 b

Central Bank said yesterday during the first eight months of 2010, workers’ remittances increased by 12.9 % to $2,479 million over that of the corresponding period of 2009.

Including the proceeds of the Sovereign Bond issued in September 2010, the gross official reserves, (without Asian Clearing Union (ACU) funds) increased to $6.8 billion by 25 October 2010. Based on the previous 12 months average expenditure on imports of $1,070 million per month, the gross official reserves, without ACU funds, were equivalent to 6.4 months of imports.

Central Bank said considering its aim of maintaining a foreign exchange reserve level equivalent to around 5 months of imports, the quantum of the current reserve is substantially over the planned level.