Trade gap widening persist as exports up 7.6%, imports by 28% in February

The Central Bank on Friday said earnings from exports increased by 7.6% to $ 879 million in February 2012 while expenditure on imports increased by 27.9% to $ 1,581 million over the corresponding month of the previous year.

The largest contribution to export earnings in February 2012 was from industrial exports. Industrial exports grew by 3.3%, year-on-year in February 2012 mainly driven by gem, diamonds and jewellery and rubber products.

Export earnings from gems, diamonds and jewellery increased by 34.1%. Earnings from rubber-based products increased by 17.5% due to the continuous high demand from major export destinations, particularly from the USA.

Earnings from textiles and garments exports, which accounted for about 40% of total export earnings, increased moderately by 1.4%.

Earnings from petroleum products, transport equipment, food, beverages and tobacco, leather, travel goods and footwear and ceramic products declined in February 2012.

Earnings from agricultural exports declined in February 2012, as a result of lower performance recorded in traditional agricultural exports of tea and rubber. Earnings from tea exports declined by 11.6%, year-on-year, to $ 105 million mainly due to geo political uncertainties in major tea importing countries in the Middle East.

Rubber exports declined by 32.9% to $ 18 million due to elevated demand from the domestic rubber-manufacturing industries. However, coconut exports increased by 46.5% in February 2012, mainly due to higher production and favourable prices in the international market.

Among the non-traditional agricultural exports, earnings from spices declined by 40.4% in February 2012 due to a decrease in the volume of cinnamon, pepper and cloves exports. Vegetables and minor agricultural exports also declined during this period, while unmanufactured tobacco and sea food performed well.

Expenditure on imports increased by 27.9% in February 2012 compared to the same month of the previous year. Expenditure on intermediate goods increased by 36.8% to $ 947 million mainly due to higher petroleum imports. Expenditure on petroleum imports increased by 111.7% to $ 506 million in February 2012 compared to that of February 2011, reflecting substantial increase in both price and volume of imports.

The average price of crude oil imports increased by 16.2% to $ 119.86 per barrel in February 2012. Expenditure on imports of textiles and clothing, fertiliser, diamond and precious stones, vehicles and machinery parts and food preparations declined in February 2012.

Reflecting continuous expansion in economic activities, investment goods imports grew by 41.3% to $ 380 million in February 2012. All three major categories of investment goods; transport equipment, building materials and machinery and equipment recorded growth rates of 74.4%, 38.6% and 25.6%, respectively.

Expenditure on imports of consumer goods declined by 7.5% to $ 251 million in February 2012. Import expenditure on food and beverages declined as prices of major imported food items such as sugar, lentils, onions, chillies and potatoes were lower in the international market.

In cumulative terms, earnings from exports increased marginally by 3.3% to US dollars 1,797 million during January-February 2012 compared with the same period of 2011.

Industrial exports, which accounted for 74.2% of total exports, increased by 1% during the first two months of 2012. Among the industrial exports, the textiles and garments and rubber products grew by 1.5% and 19.1%, respectively.

Cumulative expenditure on imports during the first two months of 2012 increased by 24.7% to US$ dollars ,496 million. Expenditure on investment goods imports increased by 57.8% to $ 903 million, mainly on account of machinery and equipment and transport equipment. Expenditure on imports of intermediate goods increased by 22.2% to US$ 2,044 million during the first two months of 2012.

Expenditure on petroleum imports increased by 58.1% to $ 1,021 million. However, expenditure on imports of textiles and clothing and gold decreased by 4.8% and 37% respectively.

Expenditure on consumer goods during the first two months of 2012 decreased by 2.2 per cent to $ 539 million. The trade deficit during the January-February 2012 stood at $ 1,699 million.

Tourist arrivals in February 2012 increased by 27% to 83,549 while earnings from tourism grew at a healthy rate of 35% to $ 86 million compared to the corresponding month of 2011. Worker’s remittances amounted to $ 470 million in February 2012 compared to $ 393 million in February 2011, recording a year-on-year growth of 19.6%.

By end February 2012, gross official reserves, excluding Asian Clearing Union (ACU) balances, amounted to $5,522 million. Further, by end February 2012 total external reserves, which include gross official reserves and foreign assets of commercial banks amounted to $ 6,774 million. In terms of months of imports, gross official reserves and total external reserves by end February 2012 were equivalent to 3.2 months and 3.9 months, respectively.