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Wednesday, 4 December 2013 00:01 - - {{hitsCtrl.values.hits}}
The favourable developments in the external sector together with higher inflows to the financial account, resulted in the Balance of Payments (BOP) recording an estimated surplus during the first 10 months of 2013, compared to the deficit recorded during the corresponding period of 2012.
The Central Bank said continuing the increasing trend observed from June 2013, earnings from exports in October 2013 exceeded $1 billion for the first time in the history.
This was a 35.1%, year-on-year, increase which is the highest growth rate recorded since May 2011, while expenditure on imports declined by 2.8% compared to the corresponding month in 2012.
Consequently, the trade deficit contracted significantly by 38.9% to $ 494 million during this period. On a cumulative basis, earnings from exports during the first ten months of 2013 grew by 3.6%, while expenditure on imports contracted by 1.1% from the corresponding period in 2012. Accordingly, the cumulative trade deficit contracted by 6% to $7,216 million, during the period compared to the corresponding period of 2012.
Earnings from exports in October 2013 reached $1,041 million, the highest ever monthly value recorded in the history of Sri Lanka’s exports. This growth was led by industrial exports followed by agricultural exports. Earnings from industrial exports in October 2013, which account for more than 74% of total exports, increased by 34% on a year-on year basis to $771 million mainly due to higher export of textiles and garments.
Earnings from textiles and garments exports grew by 46.8%, year-on-year, to $436 million in October 2013, which was the highest monthly value of export of garment and textiles ever recorded. Exports of garments to both the EU and USA, which are Sri Lanka’s major export destinations, recorded remarkable growth rates of 53.2% and 43.4%, respectively in October 2013, reflecting the recovery in those economies as well as seasonal demand.
Meanwhile, earnings from rubber product exports increased by 50.1%, year-on-year, to $94 million in October 2013, the highest monthly value since August 2012, led by higher exports of rubber tyres. All categories of industrial exports, except gems diamonds and jewellery, animal fodder and petroleum products grew in October 2013.
Earnings from agricultural exports rose by 37.4%, year-on-year, to $258 million in October 2013 mainly due to an increase in export earnings from tea followed by spices. Earnings from tea exports recorded a healthy growth of 26.6% to $147 million in October 2013. This was the combined outcome of a 13.6% increase in export volumes and an increase in the average export price of tea by 11.4%.
Earnings from the export of spices increased significantly by 79.9% to $41 million led by pepper and cinnamon exports. Continuing the strong performance recorded since June 2013, the volume of both pepper and cinnamon exports increased substantially although prices of those commodities declined, year-on-year.
However, in October 2013 rubber export earnings contracted by 29.0% compared to October 2012, due to the continuing decline in both export volumes and prices, owing to low demand from major rubber consumers, such as China and Japan.
Expenditure on imports declined by 2.8% to $1,535 million in October 2013, due to the significant decline in both intermediate and investment goods imports. Expenditure on intermediate goods imports declined by 7.8%, year-on-year, to $897 million in October 2013 mainly due to the decline in the importation of fuel and textiles.
Expenditure on the importation of petroleum products declined in October 2013 due to the availability of sufficient stocks from previous months.
Despite the strong growth in export of textiles and garments, there has been a steady decline in imports of textile and textile articles, reflecting improved backward linkages and higher value addition in the garment industry.
Lower import of diamonds and precious stones and metals, rubber and articles also contributed to the decline in intermediate goods imports. However, fertiliser imports increased sharply by 110.7% year-on-year, to $27 million in October 2013, mainly due to the low base in the corresponding period in 2012 and to ensure availability of adequate stocks for the upcoming Maha season.
In October 2013, import expenditure on investment goods declined by 6.8%, year-on-year, to $351 million mainly due to the decline in machinery and equipment imports by 16.5% and a decline in transport equipment imports by 11.0% although building materials imports increased by 13.4%.
Meanwhile, expenditure on consumer goods imports recorded a 25.6% growth, year-on-year, to $286 million in October 2013 with increases recorded in both food and non-food consumer goods categories.
Vehicle imports mainly contributed to the increase in consumer goods imports, recording a year-on-year increase of 150.7% in October 2013. Dairy products, clothing and accessories, oils and fats, medical and pharmaceuticals and household and furniture items also contributed to the increase in consumer goods imports.
