Ballooning trade deficit crosses $ 3 b mark in five months

Thursday, 28 July 2011 01:30 - - {{hitsCtrl.values.hits}}

The country’s trade deficit in the first five months topped the Rs. 3 billion mark to end at Rs. 3.46 billion, up by nearly 50% over the corresponding period of last year.

In the first four months the figure was Rs. 2.53 billion, reflecting an increase of 34%.

The ballooning trade deficit is on account of rapid imports though exports continue to post an increase.

The Central Bank said yesterday earnings from exports grew by 34.3% in May 2011 to $832 million, while expenditure on imports increased by 67.9% to $1,764 million.

Accordingly, the trade deficit expanded to $932 million.

The cumulative earnings from exports and expenditure on imports during the first five months have increased by 46.9% to $4,299 million and 48.1% to $7,762 million, respectively.

Earnings from all categories of exports increased in May 2011. Growth in export earnings was led by the industrial sector, particularly the textiles and garments sector, depicting higher earnings from apparel and woven fabric exports.

Earnings from rubber products exports increased in May 2011 comprising mainly of solid tyres and rubber gloves. Earnings from agricultural exports also performed well in May 2011 reflecting higher prices in the international market. The average export prices of tea and rubber remained high at $4.66 per kg and $5.15 per kg, respectively. Earnings from minor agricultural product exports increased by 42.1% to $33 million, mainly due to the higher prices.

Expenditure on imports increased in May 2011, fuelled by higher international prices and high domestic demand. The higher import expenditure was led by intermediate imports, particularly petroleum. The average import price of crude oil increased by 31.4% to $111.50 per barrel in May 2011. Expenditure on imports of investment goods also increased, led by higher expenditure on imports of transport equipment, comprising of an aircraft ($76 million). Expenditure on imports of consumer goods increased in May 2011, led by non-food consumer goods, particularly, motor vehicles ($93 million). Import expenditure on food and beverages also increased in May 2011 mainly due to the higher expenditure incurred on wheat and sugar.