Export slump worsens

• June figure down by 4.2% forcing 1H performance to suffer 0.6% decline

The country’s exports continue to suffer a decline with June marking the third consecutive month of a year-on-year dip while the first half performance turned negative too.

As per the latest Central Bank data released on Friday, earnings from exports in June amounted to $ 944 million, down by 4.2% from a year earlier. The June dip comes on top of the first contraction in two years suffered in April, down by 7.4% to $ 708 million, and in May exports marginally dipped by 0.1% to $ 833 million year-on-year.

On a cumulative basis, earnings from exports declined marginally by 0.6% to $ 5.41 billion.

The Central Bank said the dip during the first half was mainly due to a poor performance of agricultural exports despite the growth in industrial exports. The leading markets for merchandise exports of Sri Lanka during the first six months of 2015 were the US, the UK, India, Germany, Italy and China which accounted for about 55% of total exports.

The dip in June was despite the significant improvement in earnings from exports of transport equipment, petroleum products and spices.

Lower earnings from tea, textiles and garments, rubber products and seafood exports contributed to the June decline.

The Central Bank said the export of transport equipment increased significantly due to the export of a cruise ship to India. Export of petroleum products increased owing to a more than twofold growth in bunker fuel volume despite the decline in bunker fuel price by over 50%. 

Earnings from spice exports increased more than 40% as exports of all categories of spices performed well during the month. However, this positive expansion in exports was outweighed by the subdued performance of other main export categories. 

Tea exports continued to decline in June 2015 for the eleventh consecutive month due to lower demand from main tea buyers such as Russia (a drop of 29%) and the Middle East (a drop of 24%). Weaker demand for tea in main markets resulted in a decline in export volumes as well as the unit price with the lowest export price of $ 4.39 per kg of tea being recorded since September 2012. 

Earnings from exports of textiles and garments declined reflecting lower exports to EU countries despite the growth in exports to both the US and non-traditional markets. 

Export earnings from rubber products declined in June due to a lower performance in the export of rubber tyres, surgical gloves and other rubber products. Seafood exports continued to decline in June 2015 consequent to the ban on exports of fisheries products to the EU from Sri Lanka. 

Accordingly, in June 2015, seafood exports to the EU declined by 72% year-on-year, while such exports to other markets increased by 18% year-on-year.

Trade deficit widens by 52% in June

On a cumulative basis, the trade deficit during the first six months of 2015 increased by 15.6% to $ 4,086 million. 

However, poorer exports and rising imports saw the country’s trade deficit in June widen sharply by 52% to $ 689 million, expanding the first half figure to $ 4.08 billion, up by 15.6% from a year earlier.