Dip in external trade continues

The decline in the country’s external trade continued into November along with contraction in trade deficit.

Exports in November were down by 6.6% to $ 827.6 million whilst performance in the first eleven months was down by a similar percentage to $ 8.99 billion. Imports were down by 8.4% in November to $ 1.82 billion whilst cumulative figure by end-November was down by 4.5% to $ 17.5 billion.

Trade deficit contracted by 10% to $ 993 million in November and by 2.1% to $ 8.58 billion by end November 2012.

The Central Bank said the declining trend in imports continued into November 2012, given the continued reduction in expenditure on imports of items such as gold, vehicles, and transport equipment, which have largely driven the decrease in import expenditure in recent months. Export earnings also recorded a further drop in November 2012, with subdued global economic conditions persisting.

However, reflecting seasonal demand, earnings from exports of items such as garments, tea, gems and jewellery as well as leather, travel goods and footwear recorded positive growth for November 2012.

Following these developments, the cumulative deficit in the trade account of the balance of payments recorded a year-on-year decline for the first eleven months of 2012, having steadily declined since April this year.

Expenditure on imports declined across all major categories of imports. Expenditure on consumer goods declined in November 2012 as import expenditure in relation to both food and non-food items declined. Import expenditure on intermediate goods declined marginally by 0.3%, year-on-year, in November 2012, despite an increase in expenditure on imports of fuel and textiles, which together usually account for more than a third of the total import bill. Lower import expenditure in relation to gold and fertiliser mainly drove the decline in import expenditure in respect of intermediate goods.

Meanwhile, lower expenditure on imports of machinery and equipment as well as transport equipment resulted in the investment goods category recording a year-on-year decline in import expenditure in November 2012.

With respect to exports, tea exports fetched favourable prices this year and therefore helped buoy export earnings. With earnings from exports of other categories of agricultural exports declining however, earnings from agricultural exports recorded a drop in November 2012, on a year-on-year basis.

Industrial exports continued to record a decline on a year-on-year basis since March this year. However, with imports of textiles recording a growth in November, exports of garments are likely to record favourable performance in the ensuing months too, thus helping moderate the decline in export earnings observed in recent months.