• Despite October setback of 14% decline, first 10 months exports up 9.7% to $ 9.18 b
• Higher imports double trade deficit in October to $ 852 m but first ten months only 4.3% expansion
• Imports up 25% in October and by 7.3% in Jan-Oct

The country’s exports in October have declined year on year for the first time in 16 months whilst higher imports saw trade deficit double, according to latest Central Bank data. It said earnings from exports declined by 13.7%, year-on-year, in October 2014 to $ 899 million, after recording continuous monthly increases since June 2013, while cumulative earnings increased by 9.7% to $ 9,187 million during the first ten months of 2014. “This decline was mainly due to the base effect as the highest level of export earnings in 2013 was recorded during the month of October,” the Central Bank said. Expenditure on imports increased by a higher rate of 25.6% to $1,750 million in October 2014, while on a cumulative basis, imports grew by 7.3% to $15,972 million during the first 10 months of 2014. The increase in import expenditure in October 2014 was mainly due to the significant increase in imports of fuel followed by imports of personal vehicles such as motor cycles and motor cars for personal use. The trade deficit in October 2014 widened significantly to $852 million in comparison to $352 million in October 2013. “This was mainly due to the base effect as both the highest monthly export earnings and the lowest monthly import expenditure for 2013 were recorded during the month of October 2013,” the Central Bank said. The trade deficit during the first 10 months of 2014 widened by 4.3% to $ 6.78 billion. Detailing latest export sector performance, the Central Bank said the largest contribution to the decline in exports in October 2014 was from textiles and garments followed by transport equipment and rubber products, all of which are categorised under industrial exports. Export earnings of textiles and garments declined by 8.7% in October 2014 with the decline in garment exports to the EU and to the USA by 10.1% and 8.4%, respectively. Meanwhile, export earnings from spices declined continuously due to the lower production in comparison to the previous year. Export earnings from tea also declined due to the decline in both export prices and volumes. However, coconut exports increased by 51.5% mainly led by the significant increase in kernel product exports. Major export destinations during January to October 2014 were USA, UK, Italy, India and Germany accounting for about 50% of total exports. With regard to imports, the Central Bank said despite the decline in refined petroleum imports, expenditure on fuel increased significantly due to increase in crude oil imports. Further, rice imports also increased significantly during the month as a result of a shortfall in domestic rice production during the year. Imports of textiles and textiles articles, wheat and maize, paper and paper boards, vegetables and dairy products also increased during the month under consideration. The import expenditure on investment goods increased by 12.9% reflecting increases in all sub categories. However, the import expenditure on fertiliser declined during the month, as a result of a substantial decline in volume of fertiliser imports. During the first ten months of 2014, the main import origins were India, China, UAE, Singapore and Japan accounting for about 58% of total imports.

$ 109 m outflow from Govt. debt market; $ 150 m inflow to Bourse   The first 10 months of this year have seen mixed results in the external flows into Government securities market and Colombo Bourse. The Central Bank said foreign investments in the government securities market from January to end October 2014 recorded a net outflow of $109 million, while foreign investments in the Colombo Stock Exchange (CSE) up to the end November 2014 recorded a net inflow of $150 million. For the first 10 months of 2014, long term loans obtained by the Government amounted to $1,411 million. Further, inflows to Licensed Commercial Banks (LCBs) and Licensed Specialised Banks (LSBs) during the first 10 months in 2014 amounted to $450 million with a major inflow of $250 million received from the international bond issuance by the National Saving Bank during September 2014. With continuous foreign financial inflows and inflows to the current account, the overall balance of the BOP is estimated to have recorded a surplus of $1,761 million during the first 10 months of 2014 compared to a surplus of $745 million in the corresponding period of 2013. By end October 2014, Sri Lanka’s gross official reserves amounted to $8.8 billion, while total foreign assets, which include foreign assets of the banking sector amounted to $10.3 billion. In terms of months of imports, gross official reserves were equivalent to 5.5 months of imports at end October 2014, while total foreign assets were equivalent to 6.4 months of imports. “It is noteworthy that a healthy level of reserves was maintained, despite outflows on account of foreign currency debt service payments of $1,980 million and IMF-SBA payments of $624 million,” Central Bank said. It also revealed the rupee remained stable against the US dollar with only a marginal depreciation of 0.2% as at 9 December. However, based on cross currency exchange rate movements, the Sri Lankan rupee appreciated significantly against the euro by 11.9%, the Japanese yen by 14.8%, the pound sterling by 5.2%, the Canadian dollar by 7.7%, Australian Dollar by 7.9 and the Chinese renminbi by 1.8% as at 9 December. Meanwhile, the Sri Lankan Rupee depreciated against the Indian rupee by 0.3% as at 9 December.