COLOMBO (EconomyNext) - Sri Lanka's exports fell 7.4 percent to 707.5 million US dollars in May 2015 from a year earlier, dragged down by lower exports to the European Union and falling commodity prices, official data showed.
Imports rose 02 percent to 1,490 million US dollars, and the trade gap widened to 782.9 million US dollars.
The trade gap is created when domestic economic agents spends money earned outside the merchandise trade account such as remittances, tourist receipts foreign direct investment or foreign borrowings.
This year however the Central Bank has also released liquidity built up from foreign receipts in prior periods to feed state and private borrowings, which also drives imports up and can also pressure the currency, in the same way printed money puts pressure on the currency.
Apparel exports fell 2.0 percent to 330.2 million US dollars, with lower volumes to the EU. Tea exports fell 12.7 percent to 102 million dollars with lower demand as well as prices. Shipments to Russia was down 39 percent, the Central Bank said.
Rubber products fell 16 percent to 48.5 million US dollars. Petroleum products fell 42.7 percent to 18.5 million US dollars with price falls as well as lower volumes of bunkers being sold.
Seafood exports to the EU had dropped 68.3 percent due to a ban on Sri Lankan fish.
Imports were up with a sharp pick-up in non-oil goods. When oil prices fall and prices are cut, people spend the money on other goods. In addition Sri Lanka also has low interest rates fuelling credit and purchases of consumer durables and vehicles.
Consumer goods imports rose 42.5 percent to 376 million US dollars with food and beverages rising 37 percent 149.0 million US dollars. Non-food consumer goods rose 46 percent to 227 million US dollars with vehicles up 96 percent to 94.4 million US dollars.
Intermediate goods fell 15 percent to 756 million US dollars with fuel falling 32.8 percent to 212.6 million US dollars.
Investment goods rose 22 percent to 353 million US dollars with machinery and equipment rising 23.6 percent to 189 million US dollars and transport equipment rising 100 percent to 70.1 million US dollars.
In the four months to April, exports were down 0.3 percent to 3,569.1 million US dollars, and imports were up 1.5 percent to 6,282.5 million US dollars. The trade gap was up 3.9 percent to 2,713 million US dollars.