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Tuesday, 2 June 2015 01:05 - - {{hitsCtrl.values.hits}}
The external sector strengthened with the trade deficit contracting in March 2015 largely on declining imports while exports remained mostly unchanged, the Central Bank said yesterday.
During the first quarter of 2015, the trade deficit contracted marginally compared to the corresponding period of 2014 due to the increase in export earnings at a higher percentage than the increase in import expenditure.
The trade deficit in March 2015 contracted by 13.5%, year on year, following eight consecutive expansions recorded from July 2014. In cumulative basis, trade deficit during the first three months of 2015 declined by 0.1% to $ 1,931 million.
The contraction of the trade deficit, higher inflows to the services account with increased tourist earnings and inflows of workers’ remittances strengthened the current account while inflows to the financial account continued to moderate, the report said.
“Earnings from exports declined marginally by 0.9%, year-on-year, to $ 1,060 million in March 2015 from $ 1,070 million recorded in March 2014, the highest monthly earnings in 2014. The largest contribution to the decline in exports was from tea followed by precious metals and textiles and garments,” the Central Bank said.
Earnings from tea exports, which declined from August 2014, year on year, continued to decline by 27% in March 2015 as well, reflecting continuous decline in demand from major tea importers especially Russia and the Middle East, which were severely affected by the significant decline in international oil prices. Earnings from both precious metals and textiles and garments exports reflected declines mainly due to significantly higher level of exports recorded in the corresponding month of 2014.
“On cumulative basis, export earnings during the first three months of 2015 increased by 1.6%, year-on-year, to $ 2,862 million. The leading markets for merchandise exports of Sri Lanka during the first three months of 2015 were the USA, UK, India, China and Germany accounting for about 51% of total exports.”
Expenditure on imports declined by 5.5%, year-on-year, to $ 1,581 million in March 2015.
This was the first decline since July 2014 and largely attributable to the 66 per cent decline in expenditure on fuel imports.
Non-importation of crude oil during the month and record low level of refined petroleum product prices in the international market caused for this substantial decline in the expenditure on fuel imports. Import expenditure on fertiliser and dairy products, which declined by 48.8% and 43%, respectively, also contributed significantly for the decline in import expenditure.
On cumulative basis, expenditure on imports during first three months of 2015 increased marginally by 0.9%, year-on-year, to $ 4,792 million, mainly led by consumer goods imports followed by investment goods imports. During the period of January-March 2015, the main import origins were India, China, Japan, UAE and Singapore accounting for about 61% of total imports.
