Fuel imports decline in May due to refinery maintenance issues, CB says
View(s):Expenditure on fuel imports declined by 35.4 per cent in May 2014, mainly due to the delay in unloading crude oil imports during the month due to maintenance activities in oil pipelines, the Central Bank (CB) said in its latest (monthly) report on the ecnomic.
It said the trade deficit continued to improve in May, strengthening the performance in the external sector. Earnings from exports increased, while expenditure on imports reduced driven mainly by the reduction in fuel imports. This outcome, together with higher inflows on account of workers’remittances, increased tourist earnings and continued inflows to the financial account resulted in a healthy surplus in the Balance of Payments(BOP) during the first five months of 2014, compared to the corresponding period of 2013.
Exports
Expansion in all major export categories contributed to the growth in exports in May with the largest contribution to the overall growth however coming from industrial exports followed by agricultural exports. Earnings from industrial exports grew by 7.7 per cent, year-on-year, to US$639 million reflecting positive performance in almost all sub categories. Textiles and garment exports grew by 14.5 per cent, year-on-year, to $365 million in May, as a result of significant increases in exports to both traditional and non-traditional markets.
“Sri Lanka’s apparel industry has been increasing its value addition through strategies such as backward integration, establishment of brands and improved reputation as a quality and timely apparel supplier,” the CB said.
Rubber product exports also increased by 14.6 per cent to $78 million mainly due to an increase in export of rubber tyres, the main rubber product of Sri Lanka.
Raw rubber prices fell to a 5 year low in May benefitting manufacturers of rubber products. Earnings from export of machinery and mechanical appliances, food beverages and tobacco and leather products also contributed to the growth in industrial product exports.
Earnings from agricultural exports rose by 21.2 per cent, year-on-year, to $240 million in May with significant contributions from tea and coconut.Earnings from tea exports recorded a healthy growth of 9.7 per cent to $141 million.
Imports
Expenditure on imports declined by 17.6 per cent to $1.27 billion in May due to the significant decline in expenditure on imports of intermediate and investment goods.
Expenditure on imports of intermediate goods declined by 21 per cent, year-on-year, to $717 million mainly due to significant declines in the import of crude oil, diamonds and gold.
With respect to food imports, expenditure on cereals and milling industry products increased significantly, mainly due to a substantial increase in rice imports. “Imports of non-food consumer goods, increased marginally by 0.4 per cent, mainly due to a 41.4 per cent increase in import of clothing and accessories and a 10.3 per cent increase in import of personal motor vehicles,” the CB said.
Tourist arrivals rose by 26.5 per cent to 624,178 in May while earnings grew by 35.8 per cent to $901.8 million during the first five months of the year.
In June arrivals grew at a rate of 14.3 per cent, year-on-year, to 103,175, while earnings increased by 22.7 per cent to $149.1 million. The top five sources of tourist arrivals in June were India, China, UK, Maldives and Australia.
Remittances
Workers’ remittances increased by 8.8 per cent, year-on-year, to $557.5 million in May from $512.4 million in the same month in 2013.
Remittances during the period January to May grew by 10.5 per cent to $2.77 billion against $2.51 billion in the corresponding period in 2013.
“The growth in remittances continues to be driven by increased labour migration in the professional and skilled categories,” the CB said.
Net foreign inflows to the Colombo Stock Exchange (CSE) in May amounted to $69.9 million compared to $35.4 million recorded in the corresponding period in 2013.
By end May, Sri Lanka’s gross official reserves amounted to $8.8 billion, while total foreign assets, which include foreign assets of the banking sector amounted to $10.2 billion. In terms of months of imports, gross official reserves were equivalent to 5.9 months of imports at end May while total foreign assets were equivalent to 6.9 months of imports, the CB said.
“It is noteworthy that a healthy level of reserves was maintained, despite outflows on account of foreign debt service payments of $987.4 million and IMF-SBA payments of $264.7 million.