Sri Lanka exports up 9.8-pct, tourism grows 6.2-pct in May
ECONOMYNEXT – Sri Lanka’s merchandise exports rose 9.8 percent from a year earlier to 841 million dollars in May and tourism grew 6.2 percent to 240 million dollars, while remittances fell 3.4 percent to 580 million dollars, the central bank said.
The main merchandise and services exports totaled 1.744 billion US dollars.
Merchandise imports rose 7.7 percent to 1,857 million US dollars.
The rest of the trade deficit (current account deficit) is usually driven by financial inflows such as net foreign borrowings which are spent by government in the domestic economy and foreign direct investment, which are used to construct factory buildings or machinery.
Money printing by the central bank will also drive credit and imports though the banking system, but unlike dollar inflows, the new money created will create an overall balance of payments deficit and put pressure on the rupee peg with the dollar, as there are no matching inflows to back the spending.
Sri Lanka’s private citizens are usually net savers and the trade deficit is mostly driven by borrowings taken and spent by the government.
Any remittances which are saved in foreign currency deposits will not generate a trade deficit until a bank buys Sri Lanka Development Bond to finance the budget deficit or gives a dollar loan to a qualified local borrower.
Industrial exports rose 15.5 percent to 709.7 million US dollars, with apparel and textiles up 10.9 percent to 398.3 million US dollars.
Rubber products rose 2.4 percent to 68.6 million US dollars and petroleum products rose 66.8 percent to 46.1 million US dollars and gems and jewelry rose 3.3 percent to 23.1 percent.
Chemical products rose 28.1 percent to 14.3 percent and base metals rose 56.1 percent to 14.5 million US dollars.
Agricultural exports fell 5.9 percent to 209.6 million US dollars with tea falling 7.9 percent to 121.2 million US dollars.
Coconut exports fell 13.6 percent to 24.2 million US dollars, minor agricultural products fell 19 percent to 10.5 million US dollars.
Seafood exports rose 19.9 percent to 21.2 million US dollars.
Consumer goods imports rose 8.1 percent to 414.5 million US dollars, vehicles up 29.7 percent to 119.6 million US dollars and foods and beverages down 21.1 percent to 128.6 million US dollars.
Sri Lanka raised fuel prices in May which may cause non-oil imports to moderate in the coming months as losses financed by credit at Ceylon Petroleum Corporation falls.
Intermediate goods rose 20.6 percent to 1,042.7 million US dollars with fuel imports rising 61.8 percent to 348.9 million US dollars.
Legal gold imports fell to 0.1 million dollars from 35.8 million US dollars. Investment goods fell 8.8 percent to 398.2 million US dollars.
In the five months to May, Merchandise exports rose 6.7 percent to 4,707 million US dollars, imports rose 11.8 percent to 9,622 million US dollars and the trade deficit grew 17 percent to 4,914 million US dollars. (Colombo/July21/2018)