Sri Lanka's external sector reflected a modest performance in August 2015 (year-on-year basis) with a slightly lower trade deficit and robust growth in tourist earnings,the Central Bank said yesterday.
Despite the slowdown in imports during the first eight months of 2015, the cumulative trade deficit as at end August 2015 had increased by 5.0 per cent, as a result of mediocre export performance on account of dampened global demand. However, the current account balance was buoyed by the growth in earnings from tourism.
As observed across emerging markets, net inflows to the financial account moderated as a result of the unwinding of short term foreign investments, in the wake of a possible increase in interest rates in USA.
The decision of the Central Bank to accommodate greater flexibility in the determination of the exchange rate from early September 2015 will help the external sector to gather momentum gradually.
This policy change is expected to strengthen the external sector mainly through the improvement in the trade account and financial account leading to the strengthening of the country's gross official reserves position.
The total earnings from exports amounted to US$ 799 million in August 2015. This reflected a decline of 19.5 per cent, year-on-year, showing decreases in all major export categories.
The lower earnings from tea, textiles and garments, transport equipment and rubber products mainly contributed to the overall decline in exports earnings during the month. Earning from tea exports in August 2015 declined by 33.9 per cent to US dollars 92 million due to the combined effect of lower export volumes and prices. Tea export earnings from Russia and the Middle East declined, year-on-year, by 38.6 per cent and 38.3 per cent, respectively, during the month owing to the substantial decline in oil revenue of those countries. Gems, diamonds and jewellery, machinery and mechanical appliances, food beverages and tobacco are the other export categories that largely contributed to the overall decline in export earnings during the month.
However, spices and unmanufactured tobacco, categorised under agricultural exports, and printing industry products, categorised under industrial products recorded a growth during the month.
www.dailynews.lk
Despite the slowdown in imports during the first eight months of 2015, the cumulative trade deficit as at end August 2015 had increased by 5.0 per cent, as a result of mediocre export performance on account of dampened global demand. However, the current account balance was buoyed by the growth in earnings from tourism.
As observed across emerging markets, net inflows to the financial account moderated as a result of the unwinding of short term foreign investments, in the wake of a possible increase in interest rates in USA.
The decision of the Central Bank to accommodate greater flexibility in the determination of the exchange rate from early September 2015 will help the external sector to gather momentum gradually.
This policy change is expected to strengthen the external sector mainly through the improvement in the trade account and financial account leading to the strengthening of the country's gross official reserves position.
The total earnings from exports amounted to US$ 799 million in August 2015. This reflected a decline of 19.5 per cent, year-on-year, showing decreases in all major export categories.
The lower earnings from tea, textiles and garments, transport equipment and rubber products mainly contributed to the overall decline in exports earnings during the month. Earning from tea exports in August 2015 declined by 33.9 per cent to US dollars 92 million due to the combined effect of lower export volumes and prices. Tea export earnings from Russia and the Middle East declined, year-on-year, by 38.6 per cent and 38.3 per cent, respectively, during the month owing to the substantial decline in oil revenue of those countries. Gems, diamonds and jewellery, machinery and mechanical appliances, food beverages and tobacco are the other export categories that largely contributed to the overall decline in export earnings during the month.
However, spices and unmanufactured tobacco, categorised under agricultural exports, and printing industry products, categorised under industrial products recorded a growth during the month.
www.dailynews.lk
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