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Wednesday, 10 August 2016 00:00 - - {{hitsCtrl.values.hits}}
Mirroring lacklustre international commodity prices, Sri Lanka’s trade deficit grew 15.7% to $ 814 million from $ 703 million in May 2015 as exports dropped by 12% reflecting contraction in all major sectors as imports edged up marginally by 0.03% to $1.59 billion, the Central Bank said yesterday in its latest external performance report, which also rounded up the deficit of the first five months to $ 3.4 billion, from $ 3.38 billion the previous year.
Cumulative earnings from exports during the first five months of 2016 contracted by 6%, year-on-year, to $ 4.21 billion largely due to a reduction in export earnings from transport equipment, petroleum products, tea and spices.
Export earnings from tea dropped substantially in May 2016 reflecting declines in both average export price and volume of export. Average export price of tea decreased by 5.3% to $ 4.24 per kilogram owing to lower demand from the Middle East and Russia while export volume also declined by 23% to 21.26 million kilograms.
Earnings from the exports of rubber products declined during the month exhibiting declines in all its sub categories, particularly rubber tyres, and surgical and other gloves. Earnings from textile and garment exports, the main export product of Sri Lanka which performed well during the past few months, also declined in May 2016 reflecting lower garment exports to both traditional and non-traditional markets.
“However, earnings from gems, diamonds and jewellery, plastics and articles thereof, transport equipment, rubber and unmanufactured tobacco exports showed some improvement in May 2016 in comparison to May 2015,” the Central Bank said.
The leading markets for merchandise exports of Sri Lanka during the first five months of 2016 were the USA, UK, India, Germany and Italy, accounting for about 54% of total exports.
Reversing the year-on-year declining trend that prevailed during the last ten months, expenditure on imports grew marginally by 0.3%, to $ 1.5 billion in May 2016 compared to $ 1.58 billion in May 2015. This growth was largely contributed by the significant increase registered in import expenditure on investment goods, despite the decline recorded in consumer goods and intermediate goods imports.
“Import expenditure on machinery and equipment and building materials increased considerably in May 2016 reflecting increases in almost all sub categories. In addition, import expenditure on textile and textile articles increased during the month mainly due to considerable growth recorded in fabric and fibre imports.”
Further, expenditure on the importation of gold increased substantially in May 2016. Also, import expenditure on rubber and articles thereof and chemical products increased significantly during the month. However, in May 2016, expenditure on fuel imports declined substantially due to the considerable decline recorded in the average import prices of crude oil, refined petroleum products and coal, despite significant increase in the volume of coal and refinery petroleum products.
Even though the average import price of crude oil, which was $ 48.84 per barrel in May 2016, declined compared to $ 63.09 per barrel recorded in May 2015, it increased compared to $ 44.05 per barrel in April 2016, reflecting the increase of crude oil prices in the international market.
Meanwhile, reflecting mainly the impact of tax increases for vehicle imports from the Budget 2016, import expenditure on personal motor vehicles and transport equipment, categorised under consumer goods and investment goods, dropped largely due to considerable declines recorded in motor cars, hybrid electric vehicles and road vehicles, particularly auto-trishaws and commercial cabs. In addition, import expenditure on base metals, rice and mineral products also declined considerably in May 2016.
On a cumulative basis, expenditure on imports during the first five months of 2016 contracted by 2.8% to $ 7,645 million, mainly due to the declines recorded in fuel, transport equipment and rice imports. China, India, Japan, Singapore and UAE were the main import origins during the first five months of 2016, which accounted for about 56% of total imports.
During the first five months of the year, foreign investments in the Colombo Stock Exchange (CSE) recorded a net outflow of $ 37.3 million, including net outflows of $ 38.6 million from the secondary market and inflows of $ 1.3 million to the primary market. The Government securities market recorded a net outflow of $ 442.8 million during the first five months of 2016 compared to a net outflow of $ 61.7 million during the corresponding period of 2015.
Long-term loans to the Government recorded a net outflow of $ 20.1 million during the first five months of 2016, compared to a net inflow of $ 82.6 million during the corresponding period of 2015.
During the first five months of 2016, the overall Balance Of Payments (BOP) is estimated to have recorded a deficit of $ 1,142.3 million in comparison to a deficit of $ 1,307.4 million recorded during the corresponding period of 2015.
International Reserves and Exchange Rate Movements Sri Lanka’s gross official reserves as at end May 2016 amounted to $ 5.6 billion, equivalent to 3.6 months of imports, while total foreign assets amounted to $ 7.7 billion, equivalent to 4.9 months of imports.
The rupee recorded a modest depreciation of 1.1% against the US dollar during the period from end 2015 to 8 August. Furthermore, reflecting the cross currency movements, the rupee also depreciated against the euro by 2.6%, the Japanese yen by 16.2%, the Canadian dollar by 6%, the Australian dollar by 5.2% and the Indian rupee by 0.6% during this period while appreciating against the pound sterling by 12.1%.
Receipts from workers’ remittances increased by 11.1% to $597.2 million in May 2016 in comparison to the decline of 1.4%recorded in the previous month.
Accordingly, cumulative inflows from workers’ remittances during the first five months of 2016 amounted to $2.96 billion, an increase of 5.9% from the corresponding period of 2015.
Cumulative earnings from tourism increased to $1.59 billion during the first six months of 2016 compared to $1.37 billion recorded during the same period in 2015.
Tourist arrivals recorded a marginal growth of 2.2%, year-on-year, in June 2016, with 118,038 tourists arriving during the month.
The significant decline in tourist arrivals from Russia, Belgium, Norway and Maldives were the main reason for this low growth. However, cumulative tourist arrivals during the first six months of 2016 increased by 16.2% to 964,267 compared to the corresponding period of 2015.
The top five sources of tourist arrivals up to June 2016 were India, China, UK, Germany and France, accounting for 52.6% of the total tourist arrivals during the period.
