Tuesday, 6 May 2014 00:01
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Resilience in the apparel sector and a rebound in agriculture largely helped to keep exports in February on the up, whilst the country saw continued contraction in the trade deficit.
The Central Bank said yesterday earnings from exports in February 2014 increased by 5.4% to $ 841 million, and expenditure on imports declined by 6.2% to $ 1,345 million, whilst the trade deficit contracted by 20.7% to $504 million.
The cumulative trade deficit for the first two months of 2014 contracted by 12.5%, as the growth in export earnings of 13.9% outpaced the 1.1% increase in import expenditure
Giving the detailed performance, the Central Bank said earnings from exports increased mainly led by improved performance in agricultural exports which grew by 15.3%, year-on-year, in February 2014 to $ 201 million.
Healthy performance in tea and coconut product exports mainly contributed to the growth in agricultural exports. Export earnings from tea increased by 11.7% to $ 116 million as a result of the increase in both the price and volume of tea exported.
The average export price of tea increased by 8.9%, to $ 5.16 per kg in February 2014 from $ 4.74 per kg in February 2013, while export volumes increased by 2.6%, year-on-year. Earnings from coconut product exports increased by 60.3% to $ 23 million, due to improved performance in both kernel and non-kernel coconut products in terms of both price and volume.
Export earnings from minor agricultural products and seafood also increased significantly by 124.9% and 37.1%, respectively, in February 2014. However, earnings from export of spices declined by 23.6%, mainly due to the decline in export of pepper and cloves, owing to unavailability of stocks during the non-harvesting period.
Earnings from industrial exports, which account for more than three-fourths of total export earnings increased by 2.5%, year-on-year, to $ 637 million in February 2014, with earnings from export of textiles and garments growing by 6.6% to $ 396 million. A notable increase of 35.7% was observed in export of garments to non-traditional markets, reflecting greater diversification of markets in the industry. Garment exports to USA and to the EU increased by 8.8% and 8.7%, respectively.
Export of rubber products grew by 6.3% to $ 70 million mainly due to the increase in export of rubber tyres, although export earnings from rubber gloves declined during the month. Export earnings from chemical products, petroleum products, food, beverages and tobacco also increased in February 2014. However, earnings from gems, diamonds and jewellery declined by 14.1%, year-on-year, to $26 million, mainly due to the substantial decline in diamond exports as a result of low global demand.
Expenditure on imports declined by 6.2%, year-on-year, to $ 1,345 million in February 2014, as a result of a decline in both intermediate and investment goods. Expenditure on intermediate goods imports declined by 4.7%, year-on-year, to $827 million mainly due to the decline in import of diamonds and precious stones and precious metals including gold by 82%. Despite the strong growth in textiles and garment exports, textiles and textile article imports declined by 6.4%, reflecting higher domestic value addition in the garment industry.
Expenditure on fuel increased marginally by 0.6%, year-on-year, to $421 million in February 2014 due to the increase in refined petroleum products by 51.3% despite the decline in import of crude oil. The increase in imports of refined petroleum products was due to greater dependence on thermal power generation as hydropower generation declined due to adverse weather conditions.
The high growth rate in the import of wheat and maize recorded during the month was mainly due to the low base. Despite the reduction in prices, expenditure on importation of fertiliser increased by 133.3% in February 2014, due to the high usage of fertiliser for paddy and other crops during the Yala season as well as the low base.
Expenditure on imports of investment goods declined by 17.7%, to $ 293 million in February 2014, mainly due to the decline in transport equipment imports which declined by 53%. A reduction in imports of almost all sub categories contributed to the contraction in transport equipment import in February. Import expenditure on building materials declined by 21.8% due to lower imports of iron and steel, cement and mineral products.
However, expenditure on machinery and equipment imports increased by 2.7%, due to the increase in import of engineering equipment, agricultural machinery and medical and laboratory equipment, although import of electronic equipment, telecommunication devices and textile industry machinery declined.
Despite the decline in import expenditure on intermediate and investment goods, import of consumer goods increased by 7.2%, year-on-year, to $ 224 million in February 2014, reflecting increases in both food and non-food consumer goods imports.
Import of food and beverages increased by 1.4% with import of dairy products growing by 34.6%, on account of the increase in the price of milk powder in the international market. However, imports of many sub categories including oil and fats, seafood, vegetables and sugar and confectioneries declined in February 2014.
Non-food consumer goods imports increased by 12%, mainly due to the significant increase in vehicle imports by 61.4%. However, import expenditure on home appliances declined significantly during the month.
