Trade deficit narrows in Sept, cumulative exports down 3pct

Jan 13, 2017 (LBO) - Sri Lanka’s trade deficit narrowed in September 2016 with an increase in export earnings for the second consecutive month, together with a reduction in import expenditure. Earnings from exports grew by 5.7 per cent to 898 million dollars in September, compared with 850 million dollars in the same month in 2015.

"The highest contribution to growth was from industrial exports led by transport equipment, food beverages and tobacco and rubber products, followed by agricultural exports, led by tea," the central bank said in a statement. Earnings from transport equipment increased more than fivefold to 31 million dollars mainly due to export of a ship to Singapore while earnings from "food, beverages and tobacco exports increased owing to higher performance in miscellaneous food preparations." However, earnings from textiles and garments exports, which account for around 43 per cent of total export earnings, contracted for the second consecutive month by 7.1 per cent, year-on-year, to 382 million dollars, due to a temporary slowdown in global demand for garment exports from the traditional markets, such as the USA and EU. On a cumulative basis, export earnings during the first nine months of 2016 contracted by 3.0 per cent, year-on-year, to 7,763 million dollars, mainly due to the decline in export earnings from transport equipment and petroleum products. Agricultural exports, such as tea and spices, contributed to the contraction in exports during this period. Earnings from textile and garments exports increased by 2.4 per cent during the first nine months of 2016.

Expenditure on imports declined by 2.5 per cent to 1,543 million dollars in September compared with the same month in 2015. Lower expenditure on importation of personal motor vehicles and fuel contributed to this decline. Imports during the first nine months declined by 1.7 percent to 13,946 million dollars due to declines in importation of vehicles for personal and business use, and rice and fuel imports. The deficit in the trade balance decreased to 645 million dollars by 12 per cent in September compared with 733 million dollars in September 2015. However, the cumulative trade deficit during the first nine months of 2016 remained almost unchanged at 6,183 million dollars in comparison with 6,182 million dollars recorded during the same period of 2015. The overall balance of payments is estimated to have recorded a surplus of 243.1 million dollars during the first nine months, in comparison with a deficit of 2,316.5 million dollars recorded during the corresponding period of 2015.