Balance of Payments records $ 991 m surplus in 2013
Tuesday, 11 February 2014 00:01
Exports up 6.3% to $ 10.38 b; imports down by 6% to $ 17.9 b; trade deficit contracts by 19% to $ 7.6 b
The Central Bank said yesterday that the country’s overall Balance of Payments (BOP) is estimated to have recorded a surplus of $ 991 million during 2013, significantly surpassing the initial estimates for the year.
“This was achieved despite the volatility in international financial markets, which particularly affected emerging market economies in the region,” the Central Bank said.
The impressive achievement was possible due to considerable improvement in external trade, continued inflows to both the Current Account and the Financial Account of the BOP.
“These inflows resulted in a significant increase in the overall balance as at end December 2013,” the bank said.
Earnings from exports recorded an increase, while a notable reduction in imports was witnessed during the month, considerably reducing the trade deficit. Inflows on account of workers’ remittances and tourist earnings also recorded the highest values during a month, while inflows to the Financial Account increased moderately during December.
On a cumulative basis, earnings from exports in 2013 grew by 6.3% to $10,386 million, while the latest revised data provided by Sri Lanka Customs indicate that expenditure on imports amounted to $17,999 million in 2013 down by 6.2% from 2012. As a result, the cumulative trade deficit contracted by a significant 19.2% to $7,613 million, during 2013 compared to 2012.
Earnings from exports, which surpassed $1 billion during the preceding two months continued to rise in December 2013, recording an increase of 13.2% in December 2013, while expenditure on imports recorded a marginal increase of 2.1%. As earnings from exports increased by more than the increase in expenditure on imports, the trade deficit contracted significantly by 12.9% to $565 million in December 2013.
Exports in December 2013 increased to $986 million due to higher earnings from industrial and agricultural exports. Industrial exports, which account for more than three quarters of total export earnings, increased by 15.2% on a year-on-year basis to $741 million in December 2013 with continued growth in exports of textiles and garments. Earnings from export of textiles and garments grew by 26.9% year-on-year to $454 million in December 2013. Export of garments to the EU and USA, which are the major export destinations for garments, grew by 24.9% and 35.6%, respectively in December 2013.
Meanwhile, export of rubber products increased by 22.4% to $94 million due to higher growth in surgical and other glove exports. Export of leather, travel goods and footwear also grew by 82.4%, year-on-year. Apart from these, plastics and articles thereof, chemical products and ceramic products also recorded positive growth.
However, earnings from the export of transport equipment, which include ships and boats declined significantly by 84.7% due to the high base in 2012. Earnings from petroleum products exports also declined by 13%, due to a decline in volumes, as the price was higher than in competitor countries. Earnings from agricultural exports rose by 11.4%, year-on-year, to $242 million in December 2013, led by tea exports.
Earnings from tea exports increased by 7.3% to $148 million in December 2013, due to favourable prices that prevailed in international markets, despite a decline in export volumes. The average price of tea exported increased to $5.12 per kg in December 2013 from $4.47 per kg in December 2012. Earnings from coconut exports recorded a significant growth of 31.9% led by an increase in kernel products due to both higher export volumes and prices.
Earnings from the export of spices increased by 13.8% to $26 million led by higher export volumes in pepper, cinnamon and nutmeg and mace exports. Export of seafood, minor agricultural products and vegetables also recorded healthy growth. However, in December 2013 rubber export earnings continued to decline by 7.7% compared to December 2012, due to an increase in demand from the domestic industrial sector.
Expenditure on imports grew by 2.1% to $1,551 million in December 2013, led by an increase in both consumer and intermediate goods imports. Expenditure on intermediate goods imports increased by 6.7%, year-on-year, to $936 million in December 2013 mainly due to the increase in the importation of fuel. Expenditure on the importation of fuel increased by 21.4% to $454 million in December 2013, due to higher expenditure on crude oil imports, despite the decline in refined products imports.
The significant increase in the expenditure on crude oil imports by 90.8% to $144 million in December was to ensure the availability of adequate supplies as there were less imports in November and no oil imports during October.
Expenditure on imports of chemical products, fertiliser and agricultural inputs also increased in December 2013. However, despite the strong growth in export of textiles and garments, there has been a steady decline in the importation of textile and textile related articles, reflecting improved backward linkages and higher value addition in the garment industry. Imports of base metals and diamonds and precious stones also declined significantly.
Expenditure on consumer goods imports recorded a 25.8% growth, year-on-year, to $302 million in December 2013 with increases recorded in both food and non-food consumer goods categories. Vehicle imports contributed significantly to the increase in consumer goods imports, recording a year-on-year increase of 91.9% in December 2013. Imports of medical and pharmaceutical products also increased by 29.5%.
In the food and beverages category, vegetables and dairy products also contributed to the increase in consumer goods imports. However, import expenditure on investment goods declined by 22.5%, year-on-year, to $311 million, reflecting declines in all three major categories of imports.
Expenditure on machinery and equipment imports declined by 25.3% to $165 million. Expenditure on building materials imports declined by 11.3% to $108 million mainly due to the decline in cement imports, while import of transport equipment declined by 35.4%.