Trade deficit tops $ 3.3 b

Wednesday, 6 October 2010 00:24 -     - {{hitsCtrl.values.hits}}

Exports grew by only 0.6% in July but imports clock 25% rise

The country’s external trade remains erratic with July producing mixed performance as exports lag behind imports, bloating the first seven months deficit to $ 3.36 billion, up 104% over the corresponding period of last year.

Exports in July grew by only 0.6% to $ 656 million over the corresponding month of 2009 and recorded the slowest year on year growth since the dip in January. Despite the insignificant percentage, July marked the third consecutive month of growth year-on-year.

Earnings from agricultural exports performed well, while earnings from industrial exports declined marginally. Expenditure on imports increased by 25.3% to $1,177 million in July 2010, reflecting increases in all major categories of imports.  

Cumulative earnings from exports and expenditure on imports have increased by 11.4% and 39.2%, respectively, during the first seven months of 2010. The trade deficit expanded to $3,364 million during this period.

The increase in earnings from agricultural exports is attributed mainly to the healthy performances by the tea and minor agricultural export sectors. Year-on-year, tea exports volumes grew by 6.1% to 28.8 million kilograms in July 2010 while the average export price of tea increased by 1.4% to $4.19 per kg.  

Earnings from minor agricultural exports grew by 17.7% mainly due to significant increases in the export volumes of sesame seeds, pepper, vegetables and cloves and the higher prices fetched by essential oils, cardamoms and cinnamon.

Lower rubber production due to unfavourable weather conditions amidst higher international demand for natural rubber led export prices of rubber to increase by 84.4% to $3.28 per kg. Although rubber export volumes declined by 46.0% in July 2010, exports of rubber based products have increased substantially, reflecting higher levels of domestic value addition.

Other key categories of industrial exports, such as machinery and equipment and petroleum-based products also performed well in July 2010. Nevertheless, earnings from industrial exports declined marginally to $ 483 million in July 2010, led by lower exports of textiles and garments, ceramic products and diamonds and jewellery.

Expenditure on imports of consumer goods increased significantly during the month of July 2010, led by higher imports of non-food consumer goods, of which nearly 45% comprised of motor vehicles. Food imports also increased mainly due to the higher prices of sugar imports. However, expenditure on rice imports declined in view of the lower prices in the international markets and the bountiful crop from the Yala season.

Expenditure on intermediate goods also increased, led by higher imports of fertiliser, mainly due to the substantially higher import volumes of fertiliser amidst lower prices. Expenditure on investment goods increased owing to the significant increases in expenditure on transport equipment, of which around 55% comprised of an aircraft imported in July 2010.