Sri Lanka imports rise sharply as exports fall
Dec 12 (EconomyNext) – Sri Lankan imports rose 25.6 percent to 1,750 million US dollars in October 2014 from a year ago, driven by higher spending on fuel and vehicles as exports slumped, widening the trade gap, Central Bank data showed.
Earnings from exports fell by 13.7 percent in October 2014 to 899 million US dollars, the first fall since June 2013, it said in a statement.
The trade deficit in October 2014 widened significantly to 852 million in comparison to 352 million US dollars in October 2013.
"This was mainly due to the base effect as both the highest monthly export earnings and the lowest monthly import expenditure for 2013 were recorded during the month of October 2013," the Central Bank said.
The trade deficit during the first ten months of 2014 widened by 4.3 percent to 6,785.8 million dollars over the corresponding period in 2013.
Sri Lanka’s trade gap narrowed last year as private credit fell, reducing domestic import demand leading to a build-up of foreign reserves within the central bank and excess liquidity at commercial banks.
But from September credit growth has picked up leading to more imports.
The Central Bank said the increase in import expenditure in October 2014 was mainly due to the significant increase in imports of fuel followed by imports of personal vehicles such as motor cycles and motor cars for personal use.
"Despite the decline in refined petroleum imports, expenditure on fuel increased significantly due to increase in crude oil imports," it said.
"Rice imports also increased significantly during the month as a result of a shortfall in domestic rice production during the year."
Imports of textiles and textiles articles, wheat and maize, paper and paper boards, vegetables and dairy products also increased during the month.
Imports of investment goods increased by 12.9 percent.
During the first ten months of 2014, the main import origins were India, China, UAE, Singapore and Japan, accounting for about 58 percent of total imports.
All key exports fell in October 2014 except coconut.
"The largest contribution to the decline in exports in October 2014 was from textiles and garments followed by transport equipment and rubber products," the Central Bank said.
Export earnings of textiles and garments declined by 8.7 percent in October 2014 with the decline in garment exports to the EU and to the USA by 10.1 percent and 8.4 percent.
Export earnings from tea also declined due to the decline in both export prices and volumes.
However, coconut exports increased by 51.5 percent mainly led by the significant increase in kernel product exports.