Exports dip for seventh consecutive month

The country’s export sector suffered a decline for the seventh consecutive month, further widening the trade deficit as it lagged imports. 

The Central Bank said earnings from exports at $850 million in September 2015 reflected a year-on- year contraction of 5.9% the seventh consecutive decline since March 2015.

The largest contribution to this drop came from industrial exports, which declined by 4.7%, led by subdued performance of rubber products, gems, diamonds and jewellery, machinery and mechanical appliances and printing industry products, which jointly attribution to around 60% of the overall decline in exports. 

However, export earnings from textiles and garments, which account for around 48% of total exports increased by 1.8%, year-on-year during the month, reflecting a considerable expansion in garments exports to non-traditional markets such as Canada, Australia, India, United Arab Emirates and Hong Kong. 

Meanwhile, earnings from agricultural exports in September 2015 declined by 11.3%, year-on-year, mainly due to significant declines recorded in tea and sea food exports as in last few months. Tea exports have been severely affected by the lower demand from Russia and the Middle East countries. 

Accordingly, tea export earnings dropped by 20.4% in September 2015 compared to the corresponding month in 2014, reflecting declines in both export volumes and export prices. The average export price of tea decreased to $4.32 per kilogram compared to $5.01 per kilogram recorded in September 2014. 



Seafood exports also continued to decline in September 2015 due to the European Union ban on sea food imports from Sri Lanka. Accordingly, seafood exports to the EU market dropped by 82.4%, year-on-year, in September 2015. However, continuing the healthy performance observed in previous months of the year, earnings from exports of spices increased by 34.9% during the month, led by exports of pepper and cloves.

On a cumulative basis, earnings from exports contracted by 3.7% during the first nine months of the year reflecting declines in both agricultural and industrial exports. The leading markets for merchandise exports of Sri Lanka during the first nine months of 2015 were the USA, the UK, India, Germany, Italy and China which accounted for about 54% of total exports.

Expenditure on imports declined by 5.1%, year-on-year, to $1,583 million in September 2015. The largest contribution for this decline came from investment goods, followed by intermediate goods. Reduction in imports of transport equipment was the main contributor for the decline recorded in investment goods imports. 

Despite the considerable growth recorded in commercial vehicles, such as auto-trishaws, commercial cabs and agricultural tractors, expenditure on imports of transport equipment dropped by 47.9% in September 2015, mainly reflecting the higher import expenditure recorded in September 2014 due to import of a dredger vessel. 

In line with the reduction in fuel prices in the international market, fuel import bill declined continuously becoming the main contributor for the 4.8% reduction in import expenditure on intermediate goods. The average crude oil import price, which was $100.08 per barrel in September 2014, declined to $48.65 per barrel in September 2015. 

Import expenditure on textiles and textile articles, diamonds and precious stones and metals and base metals also dropped significantly during the month. However, import expenditure on wheat and maize, fertiliser and mineral products, which are categorised under intermediate goods, increased significantly in September 2015. 

Continuing the year-on-year increases recorded from May 2014, import expenditure on consumer goods increased by 7.4% in September 2015, led by vehicle imports. Expenditure on personal motor vehicle imports increased by 30.2%, year-on-year, in September 2015 led by imports of motor cars and electric vehicles. 

Further, increase in import expenditure on clothing and accessories, telecommunication devices and seafood also contributed largely for the increase in the import of consumer goods.

On a cumulative basis, expenditure on imports during the first nine months of 2015 decreased marginally by 0.6%, year-on-year, to $14,141 million mainly led by the 16.1% drop in expenditure on intermediate goods imports. During the first nine months of 2015, the main import originating countries were India, China, Japan, UAE and Singapore, which accounted for about 60% of the total imports.

The deficit in the trade account in September 2015 contracted by 4.1% to $733 million in comparison to $765 million in September 2014. However, on a cumulative basis, the trade deficit during the first nine months of 2015 increased by 3.8% to $6,145 million.