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Saturday November 27th, 2021
Economy

Sri Lanka exports hit October record as money printing drive forex shortages

ECONOMYNEXT – Sri Lanka’s exports in October 2021 rose to a historic high of 1,160 million US dollars up 35 percent from a year earlier, data from the export promotion office showed as forex shortages worsened amid money printing.

Apparel exports grew 42.8 percent to 509 million US dollars, rubber product exports grew 14.5 percent to 91.9 million US dollars, tea fell 2.4 percent to 109.5 million US dollars and coconut-based exports grew 25 percent to 77.7 million US dollars.

“This is the highest-ever merchandise export figure in any October in our history,” Export Development Board Chairman Suresh de Mel said.

“Opening up of Western markets together with the sustained production in Sri Lanka can be attributed to this increase.”

Sri Lanka’s rupee continued to be under pressure as money printing gave more purchasing power to domestic economic agents to drive imports up.

In October the central bank spent 113 million US dollars to defend a non-credible peg at 203 to the US dollar while buying 41 million dollars from surrenders despite the peg being on its weak side.

The central bank has complained that exporters are not converting enough dollars. However if dollars are not converted they cannot hurt the exchange rate, unless exports are financed with printed packing credit.

In Sri Lanka where classical economics is not widely known and Mercantilist beliefs are widespread, external troubles are blamed on lack of exports or the trade deficit, rather than money printing and open market operations.

The top export destination was the US with 291.3 million US dollars, up 47.8 percent, followed by the UK with 88.5 million US dollars, India 77.6 million US dollars up 72 percent and Germany 64.8 million dollars up 72 percent.

Total exports up to October were 10.05 billion dollars, up 21 percent from a year earlier.

Other exports that grew in October

Electrical & Electronics Components export earnings grew 87.3 percent to 38.4 million rupees with strong performance in insulated wires and cables, switches, boards and panels and electronic transformers.

Seafood exports have grown 57 percent to 24.5 million rupees in October 2021 compared to October 2020.

“This increase was mainly due to the increase in earnings from export of frozen fish, shrimps and prawns, fresh or chilled fish and other edible fish.

To boost the prawn industry, Sri Lanka’s cabinet approved a proposal to provide concenssionary loans for prawn farmers.

Another sector the export developers are heavily pushing is boat building. In October 2021 alone Sri Lanka has generated 33.7 million dollars solely from exports to Iraq.

The EDB chairman previously said in a virtual boat show that the island’s marine diversity makes it a potential nautical tourism destination which gives a boost to the development of the boating sector.

Therefore, he said it is equally important to facilitate the development of nautical tourism activities such as recreational boating, sailing, yacht chartering, water sports for the benefit of the boat building sector.

Sri Lanka’s revised export target is 15.72 billion dollars and so far it has earned 12.6 billion dollars. (Colombo/Nov19/2021)

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