Robust exports cut trade deficit

Friday, 29 April 2011 02:30 - - {{hitsCtrl.values.hits}}

Robust export growth of 52% beating the 25% increase of imports in the first two months of 2011 has helped reduce the country’s trade deficit, marking a turnaround in external trade.

The Central Bank said yesterday that the trade deficit in February 2011, though expanded by 9.1%, year-on-year to $376 million cumulatively, it contracted by 1.2% in the first two months of 2011 compared to the corresponding period of 2010 as year-on-year, earnings from exports grew by 51.9% and expenditure on imports rose by 25.2%.

In February exports rose by 36.8% to $ 860 million led by exports of textiles and garments, petroleum and rubber products. In January exports grew by 72.4% to $ 813 million over the corresponding month of last year.

Expenditure on imports in February increased by 27.0% to $ 1,236 million mainly due to increases in imports of motor vehicles, petroleum, textiles and garments and machinery and equipment.

The Central Bank detailing export performance in February said the industrial sector continued to make the largest contribution to the increase in exports, reflecting higher earnings from garments exports, of which the EU and USA accounted for 54.8% and 35.1%, respectively.

Exports of petroleum products increased by 274.7%, reflecting higher volumes and prices compared to February 2010. Earnings from exports of rubber products increased by 70.4%, year-on-year, reflecting high levels of domestic value addition amidst higher demand in the international market.

While earnings from exports of machinery and equipment increased, those from food, beverages and tobacco and diamond and jewellery declined.

Earnings from agricultural exports grew in February 2011, mainly due to the higher prices that prevailed in the international market. The average export prices of tea and rubber remained high at $ 4.68 per kg and $ 5.35 per kg, respectively. However, rubber export volumes remained low at 4.9 million kg mainly due to tighter supply as well as the increased demand from the domestic industries for the manufacture of rubber based products.

Earnings from minor agricultural exports increased by 16.2% to $31 million in February 2011, led by the high prices of cocoa products, essential oils and unmanufactured tobacco.

Expenditure on imports of intermediate goods increased in February 2011 led by higher petroleum prices amidst geopolitical uncertainties. The average import price of crude oil increased by 31.9% to $ 103.18 per barrel in February 2011. Expenditure on fertiliser and textile imports also increased in February 2011.

Expenditure on imports of consumer goods increased in February 2011 led by non-food consumer goods, particularly, motor vehicles and electrical equipment.

Import expenditure on food and drink decreased in February 2011 due to the lower import volumes of rice, sugar and wheat. Investment goods imports increased in February 2011, reflecting increases in the machinery and transport equipment categories.