Ceylon Finance Today: The trade deficit recorded a 3.8% year-on-year (YoY) increase to US$ 6,145.2 million in the first nine months of the year and a 4.1% contraction to $ 764.5 million (still a negative trade balance) in September, largely led by the import of vehicles.
Nonetheless, September's external sector was modest, supported by the healthy growth in tourist earnings and moderate increase in workers' remittances, Central Bank of Sri Lanka (CBSL) said.It further said that in the wake of a possible increase in interest rates in the U.S., net inflows to the financial account moderated, in line with the trend that has been observed across emerging markets.
The external sector is expected to strengthen in the coming months with the recent policy adjustments implemented by CBSL and the Government of Sri Lanka (GoSL), it said.
Exports down
Export earnings at $ 850 million in September 2015 reflected a YoY contraction of 5.9 per cent, the seventh consecutive decline since March 2015. The largest contribution to this drop came from industrial exports which declined by 4.7 per cent, led by subdued performance of rubber products, gems, diamonds and jewellery, machinery and mechanical appliances and printing industry products, which jointly attribution to around 60 per cent of the overall decline in exports.
However, export earnings from textiles and garments, which account for around 48 per cent of total exports increased by 1.8 per cent YoY during the month, reflecting a considerable expansion in garments exports to non-traditional markets such as Canada, Australia, India, UAE and Hong Kong.
Meanwhile, agriculture export earnings in September 2015 declined by 11.3 per cent YoY, mainly due to significant declines recorded in tea and seafood exports as in last few months. Tea exports have been affected by the lower demand from Russia and Middle East countries.
Accordingly, tea export earnings dropped by 20.4 per cent in September 2015 YoY, reflecting declines in both export volumes and export prices. The average tea export price decreased to $ 4.32 per kilogram compared to $ 5.01 per kilogram recorded in September 2014.
Seafood exports also continued to decline in September 2015 due to the European Union ban on sea food imports from Sri Lanka. Accordingly, seafood exports to the EU market dropped by 82.4 per cent YoY in September 2015.
Spices
However, continuing the healthy performance observed in previous months of the year, earnings from spice exports increased by 34.9 per cent during the month, led by exports of pepper and cloves.
On a cumulative basis, export earnings contracted by 3.7 per cent during the first nine months of the year, reflecting declines in both agricultural and industrial exports. The leading markets for merchandise exports of Sri Lanka during the first nine months of 2015 were the USA, the UK, India, Germany, Italy and China which accounted for about 54 per cent of total exports.
Import expenditure declined by 5.1 per cent YoY to $ 1,583 million in September 2015. The largest contribution for this decline came from investment goods, followed by intermediate goods.
Reduction in imports of transport equipment was the main contributor to the decline recorded in investment goods imports. Despite the considerable growth recorded in commercial vehicles such as auto-trishaws, commercial cabs and agricultural tractors, expenditure on imports of transport equipment dropped by 47.9 per cent in September 2015, mainly reflecting the higher import expenditure recorded in September 2014 due to the import of a dredger vessel.
In line with the reduction in fuel prices in the international market, fuel import bill declined continuously, becoming the main contributor to the 4.8 per cent reduction in import expenditure on intermediate goods.
The average crude oil import price which was $ 100.08 per barrel in September 2014, declined to $ 48.65 per barrel in September 2015. Import expenditure on textiles and textile articles, diamonds and precious stones and metals and base metals also dropped significantly during the month.
However, import expenditure on wheat and maize, fertiliser and mineral products which are categorized under intermediate goods, increased significantly in September 2015. Continuing the YoY increases recorded from May 2014, import expenditure on consumer goods increased by 7.4 per cent in September 2015 led by vehicle imports.
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Nonetheless, September's external sector was modest, supported by the healthy growth in tourist earnings and moderate increase in workers' remittances, Central Bank of Sri Lanka (CBSL) said.It further said that in the wake of a possible increase in interest rates in the U.S., net inflows to the financial account moderated, in line with the trend that has been observed across emerging markets.
The external sector is expected to strengthen in the coming months with the recent policy adjustments implemented by CBSL and the Government of Sri Lanka (GoSL), it said.
Exports down
Export earnings at $ 850 million in September 2015 reflected a YoY contraction of 5.9 per cent, the seventh consecutive decline since March 2015. The largest contribution to this drop came from industrial exports which declined by 4.7 per cent, led by subdued performance of rubber products, gems, diamonds and jewellery, machinery and mechanical appliances and printing industry products, which jointly attribution to around 60 per cent of the overall decline in exports.
However, export earnings from textiles and garments, which account for around 48 per cent of total exports increased by 1.8 per cent YoY during the month, reflecting a considerable expansion in garments exports to non-traditional markets such as Canada, Australia, India, UAE and Hong Kong.
Meanwhile, agriculture export earnings in September 2015 declined by 11.3 per cent YoY, mainly due to significant declines recorded in tea and seafood exports as in last few months. Tea exports have been affected by the lower demand from Russia and Middle East countries.
Accordingly, tea export earnings dropped by 20.4 per cent in September 2015 YoY, reflecting declines in both export volumes and export prices. The average tea export price decreased to $ 4.32 per kilogram compared to $ 5.01 per kilogram recorded in September 2014.
Seafood exports also continued to decline in September 2015 due to the European Union ban on sea food imports from Sri Lanka. Accordingly, seafood exports to the EU market dropped by 82.4 per cent YoY in September 2015.
Spices
However, continuing the healthy performance observed in previous months of the year, earnings from spice exports increased by 34.9 per cent during the month, led by exports of pepper and cloves.
On a cumulative basis, export earnings contracted by 3.7 per cent during the first nine months of the year, reflecting declines in both agricultural and industrial exports. The leading markets for merchandise exports of Sri Lanka during the first nine months of 2015 were the USA, the UK, India, Germany, Italy and China which accounted for about 54 per cent of total exports.
Import expenditure declined by 5.1 per cent YoY to $ 1,583 million in September 2015. The largest contribution for this decline came from investment goods, followed by intermediate goods.
Reduction in imports of transport equipment was the main contributor to the decline recorded in investment goods imports. Despite the considerable growth recorded in commercial vehicles such as auto-trishaws, commercial cabs and agricultural tractors, expenditure on imports of transport equipment dropped by 47.9 per cent in September 2015, mainly reflecting the higher import expenditure recorded in September 2014 due to the import of a dredger vessel.
In line with the reduction in fuel prices in the international market, fuel import bill declined continuously, becoming the main contributor to the 4.8 per cent reduction in import expenditure on intermediate goods.
The average crude oil import price which was $ 100.08 per barrel in September 2014, declined to $ 48.65 per barrel in September 2015. Import expenditure on textiles and textile articles, diamonds and precious stones and metals and base metals also dropped significantly during the month.
However, import expenditure on wheat and maize, fertiliser and mineral products which are categorized under intermediate goods, increased significantly in September 2015. Continuing the YoY increases recorded from May 2014, import expenditure on consumer goods increased by 7.4 per cent in September 2015 led by vehicle imports.
www.ceylontoday.lk
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