ECONOMYNEXT – Sri Lanka’s exports grew 12.13 percent from a year earlier to 1,083 million dollars in August 2021, also overtaking a pre-pandemic level but forex shortages worsened, and a credit card operator imposed a 100 dollars a day limit on foreign transactions.
The August 2021 revenue of 1,083.56 million dollars is slightly up from the pre-COVID19 pandemic export earnings in August 2019 of 1,033.00 million dollars.
“It is remarkable to see another month of exports over a billion US$ despite the ongoing pandemic,” Suresh de Mel, Export Development Board (EDB) Chairman said in a statement.
“Going forward we need to add more value to our exports and explore niche markets, and diversify our product basket and markets,” he added.
Sri Lanka is in the middle of severe forex shortages after continuous money printing to pay state worker salaries and also keep down gilt yields from the begging of 2020.
This week Nations Trust Bank, which provides America Express credit cards imposed a limit of 100 dollars on an overseas online transaction.
Sri Lanka’s low rupee rates despite a wide budget deficit and liquidity injections had led a balance of payments deficit of 5.082 billion US dollars from the beginning of 2020 to July 2021.
In a country heavily driven by Mercantilist ideology, many genuinely believe that exports will reduce a trade or current account deficit and not more imports as recipients spend the money.
They also believe exchange rates fall due to imports not due to liquidity injections that undermine the anchor of the paper money.
Apparel export has increased 12.13 percent compared to 491.5 million dollars in August 2021.
EDB said apparel has grown 12.84 percent while woven fabrics 312.9 percent also recovering from a drop in exports in July.
Export earnings from Tea in August 2021 increased by 13.41 per cent to 116.78 million dollars and export volume has increased by 16.1 percent in August 2021 compared to August 2020.
Export earnings from rubber and rubber finished products have increased by 27.31 percent to 92.34 million dollars in August 2021 with strong performance in exports of pneumatic and retreated rubber tyres and tubes and industrial & surgical gloves.
The coconut-based products have generated an increase of 13.21 percent or 92.34 million dollars in August 2021.
The exports to Sri Lanka’s largest 10 export destination too has increased in the last eight months, EDB said.
In the Month of August 20201 exports to USA generated 273.66 million dollars, up 10.07 or 248.63 million dollars.
While in the last eight months, exports to USA had increased by 15.3 percent to 1.9 billion dollars compared to the same period of 2020.
This was due to an increase in exports in of apparel sector, rubber based products (pneumatic & retreated rubber tyres & tubes, industrial & surgical gloves of rubber), motor vehicles parts, activated carbon, tea packets and cinnamon.
Whereas exports to United Kingdom, the second largest export market had dropped by 12.75 percent or 79.19 million dollars in August 2021 compared to 2020.
Still the aggreated exports to UK from January to August had recorded an increase of 9.43 percent or 604.54 million dollars compared with the corresponding period of previous year. This is due an increase of exports in apparel sector products and rubber based products.
Exports to Netherlands and Canada increased had increased over 50 percent during the period of January to August 2021 compared with the corresponding period of 2020.
Increased exports to Netherlands was led by better performance in apparel sector and liquid coconut milk.
EDB also noted that increased exports to China from January-August was led by Mineral Sands, Cocopeat and Frozen fish.
“On a region wise comparison exports to all other regions increased except CIS regions during the period of January to August 2021 compared with the corresponding period of the previous year,” EDB said.
Meanwhile the services exports estimated by EDB which includes ICT/BPM, construction, financial services and transport and logistics generated 2.18 billion dollars during the period of January to August 2021 compared to 1.64 billion dollars recorded in the corresponding period of 2020.