External trade ends 2011 at record levels

• Trade deficit balloons by 100% to near $ 10 b
• Imports tops $ 20 b mark up 50%; fuel bill up 53% to $ 4.6 b

Exports up 22% to all time high $ 10.5 b

The Central Bank on Friday said the external sector remained buoyant in 2011 with expanding external trade, growing services inflows and workers’ remittances and higher long-term inflows of direct investments and inflows to the Government amidst a challenging external environment.

It said earnings from exports recorded an increase of 24.3% to $ 906 million in December 2011 compared to that of December 2010. The expenditure on imports, although, increased by 33.7% to $ 1,910 million in December 2011, decelerating from a year-on-year increase of 78% reported for November 2011.

The expenditure on imports was driven by continuing demand for investment and intermediate goods. Government infrastructure projects financed mainly by foreign loans also raised the demand for investment goods.

The largest contribution to the export earnings in December 2011 came from industrial exports followed by agricultural exports. Industrial exports increased by 28.9% to $ 703 million in December 2011 compared to the same month of 2010.

Among industrial exports, textile and garments remained the major contributor and grew by 25.2% to $ 384 million followed by rubber products, food, beverages and tobacco and machinery and equipment.

Agricultural exports grew by 10.3%, year-on-year, in December 2011 mainly driven by tea and coconut exports. Earnings from tea exports grew by 10.5% and coconut exports recorded an impressive 97% growth in December 2011. Rubber exports declined as the demand for rubber from domestic industries continued to remain elevated.

The continuous expansion in economic activities led the share of intermediate and investment goods to contribute around 81% of the total imports in December 2011. Intermediate goods imports increased by 33.1% in December 2011, mainly due to higher expenditure of $ 478 million on petroleum imports as average import price of crude oil stood at $ 110.57 per barrel compared to $ 90.37 per barrel in December 2010.

Imports of investment goods recorded a substantial increase of 51.8% in December 2011, led by 91% growth in transport equipment and 76.6% growth in imports of building materials. In cumulative terms, earnings from exports increased by 22.4% to $ 10,487 million in 2011 compared with 2010. The share of industrial exports in total exports stood at 76.4% in 2011. Among industrial exports, the textiles and garments grew by 24.6% to $ 4,201 million in 2011. Cumulative expenditure on imports during the year 2011 increased by 50.4% to $ 20,230 million.

Imports of investment goods increased by 60.3% to $ 4,663 million, whereas the bulk of the expenditure recorded on machinery and equipment, transport equipment and building materials.

Expenditure on petroleum imports increased by 53.4% to $ 4,630 million in 2011 from $ 3,019 million in 2010, due to increase in both price and the volume. The average import price of crude oil stood at $ 108.59 per barrel in 2011 compared with $ 79.52 per barrel in 2010.

Further, expenditure on imports of textiles and clothing amounting to $ 2,231 million and gold amounting to $604 million contributed largely to intermediate goods imports. Expenditure on consumer goods imports was partly driven by import of motor cars and cycles to $ 1,001 million in 2011, as against $ 546 million in 2010.

The trade deficit in 2011 stood at $ 9,743 million, a significant portion of which was on account of infrastructure-related imports of the Government that have been funded mainly by foreign loans.