Sri Lankan exports and imports declined by 4.9% and 18% respectively on a year-on-year basis in October 2009, despite earnings from exports taking on an increasing trend since April 2009.
According to the External Sector Performance for October 2009, the Central Bank (CB) stated that export earnings declined to US$629 million, recording the lowest year-on-year decline thus far this year.
The largest contribution to the decline came from the industrial exports which were down by 8.2% mainly due to lower exports of garments and textiles, food, beverages and tobacco, machinery and equipments.
Exports of rubber products increased by 5.3% to US$40.6 million during the month while earnings from tea exports grew by 8% to US$117 million. Cumulative earnings from exports during the first ten months of 2009 declined by 15.6% to US$5,748 million compared to the corresponding period of 2008.
According to the CB, expenditure on imports declined by a relatively lower rate of 18% to US$998 million in October 2009, compared with 36.1% reduction in September. Imports of intermediate goods which accounted for 56% of imports declined by 16.7% to US$618 million, mainly due to the lower expenditure on imports of fertilizer. Expenditure on petroleum imports increased by 20.3% in October, year-on year, as the average import price of crude oil rose by 4.1% to US$72.80 per barrel. Cumulative expenditure on imports during the first ten months of 2009 declined by 33.5% to US$7,965 million compared to the corresponding period of 2008. As a result, the trade deficit contracted in October 2009 by 33.6% to US$370 million.
The CB further stated that the cumulative trade deficit decreased by 57.1% to US$2,217 million during the first 10 months of 2009 from US$5,171 million in the corresponding period of 2008. Workers’ remittances increased by 12.9% to US$2,774 million during this period. As a result, workers’ remittances during the first 10 months of 2009 were US$557 million, about 25% in excess of the trade deficit.
The gross official reserves, with and without Asian Clearing Union (ACU) funds, were at US$5,308 million and US$5,228 million, respectively by end November 2009.
This includes short-term net inflows to the Government Treasury bills of US$262 million and Treasury bonds of US$1,068 million. Based on the previous 12 month average imports (US$834 million per month), the gross official reserves, with and without ACU funds, were equivalent to 6.4 and 6.3 months of imports, respectively.