Exports’ agony and ecstasy!

The country’s exports sector faced both agony and ecstasy in October, with the month experiencing the first year-on-year on dip as well as overtaking 2010 full year performance.

As per latest data, exports in October dipped by 5% to $ 882 million, a development which the Central Bank said was on account of the higher base a year earlier. However, first 10 months’ performance at $ 8.7 billion had already overtaken 2010’s full year performance of $ 8.3 billion.

Year-to-date performance reflects a healthy 23.4% growth over 2010’s first 10 months. Though suffering a year-on-year dip in October 2011, performance was also better than the September figure of $ 853.8 million.

Imports, which surpassed the 2010 full year figure of $ 13.5 billion in September, saw a second month of $ 1.75 billion (up by 41.4% over October 2010), thereby propelling its first 10 months’ value to $ 16.4 billion, up by 50.7%.

Speeding imports saw the trade deficit ballooning by 100% to $ 7.7 billion in the first 10 months. 

Detailing October performance, Central Bank said exports saw contraction in tea, rubber and minor agricultural crops.

Industrial exports recorded a growth of 12.8% in October 2011 compared to the corresponding month of 2010. Earnings from agricultural exports, which accounted for 23% of total exports, declined by 10.3%, mainly due to decline in tea export earnings by 12.1%, year-on-year, in October 2011.

Despite the higher export prices, exports volume of rubber declined by 40.8% in October 2011 as a result of high demand for rubber by domestic industries to produce value added exports. Earnings from minor agricultural exports also declined due to the lower exports of pepper, cocoa, fruits and vegetables.

The growth in industrial exports was led by textile and garments, rubber based products, petroleum products, diamond and jewellery and food, beverages and tobacco. Textiles and garments exports grew by 12%, year-on-year, in October 2011. The rubber based products exports increased by 34.8% in October 2011 compared with the corresponding month of 2010.

The Central Bank said expenditure on imports was mainly driven by increases in intermediate and investment goods. The intermediate goods imports increased year-on-year by 42.7% led by petroleum imports. The higher petroleum import expenditure was mainly due to the higher average import price of crude oil of $ 107.2 per barrel in October 2011 compared to $ 81 per barrel for the corresponding month of 2010.

Fertiliser imports grew in terms of both prices and volumes, by 28.9% and 72.6%, year-on-year, respectively, and the sharp increase of volume was mainly due to expansion of fertiliser subsidy to cover all crops.

Imports of investment goods increased by a substantial 58.7% in October 2011, led by higher expenditure on imports of machinery and equipment, transport equipment and building materials. Expenditure on non-food imports increased by 12.7% despite the decline in personal motor vehicle imports by 16.3%, year-on-year, in October 2011.

With regard to the $ 7.7 billion trade deficit, the Central Bank said a significant portion was on account of imports of infrastructure-related projects of the Government that have been funded mainly by foreign loans. In that context, the total inflows to the Government, including the proceeds of the International Sovereign Bond issue, amounted to $ 3,507 million during the first 10 months of 2011.

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