Sri Lanka June trade gap widens as tea, textile exports fall, car imports rise
ECONOMYNEXT – Sri Lanka’s trade deficit widened in June 2015 as exports fell, dragged down by lower earnings from tea and textiles, while imports rose, led by car imports, the central bank said.
The deficit in the trade account in June 2015 widened by 51.9 percent to 689 million US dollars from the year before, it said.
Earnings from exports in June 2015 fell 4.2 percent to 944 million US dollars from the previous year.
Expenditure on imports in June 2015 increased by 13.5 percent to 1,633 million US dollars over the same period.
In June 2015, export of transport equipment increased significantly due to the export of a cruise ship to India.
Despite the significant improvement in earnings from exports of transport equipment, petroleum products and spices, lower earnings from tea, textiles and garments, rubber products and seafood exports contributed to the decline in total exports, a statement said.
“Tea exports continued to decline in June 2015 for the eleventh consecutive month, due to lower demand from main tea buyers such as Russia (a drop of 29 per cent) and the Middle East (a drop of 24 per cent).”
Weaker demand for tea in main markets resulted in a decline in export volumes as well as the unit price with the lowest export price of 4.39 US dollars per kilo of tea being recorded since September 2012.
“Earnings from exports of textiles and garments declined reflecting lower exports to EU countries despite the growth in exports to both the USA and non-traditional markets,” the statement said.
The higher spending on imports in June 2015 was led by vehicle imports for personal usage categorised under consumer goods.
This increased by 110.1 percent due to higher importation of motor cars and motor cycles, and vehicle imports for business purposes categorised under investment goods, which increased by 238.6 percent due to higher importation of auto trishaws and other motor vehicles.
“Import expenditure on textiles and textile articles increased reflecting potential higher export demand in coming months and increased local demand for garments,” the central bank said.
Fuel imports declined by 41.3 percent to 242 million US dollars in June 2015 from a year ago, reflecting a 70.3 percent decline in expenditure on crude oil and a 23.6 percent drop in expenditure on refined petroleum products.
Lower expenditure on fuel imports was mainly due to the significant decline in oil prices in international markets. (Colombo/August 21 2015)