Wednesday, 8 October 2014 00:52
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Exports up 8% imports by 17% in August; trade deficit widens by 32%
The Central Bank said yesterday that the upward momentum in the external sector continued with a further improvement of export earnings in August 2014.
It said expenditure on imports also recorded an increase for the second consecutive month of the year. The cumulative trade deficit was lower during the first eight months of 2014, compared to the same in 2013, helping to improve the current account of the Balance of Payments (BOP).
This outcome, together with continued inflows to the financial account resulted in a higher surplus in the BOP during the first eight months of 2014, thereby strengthening the international reserves and the exchange rate.
Earnings from exports continued to increase in August 2014 by 7.9%, year-on-year, to $991 million while the cumulative earnings were up by 14.8% to $7,385 million during the first eight months of 2014. The main product categories that contributed to the export growth in August 2014 were textiles and garments, transport equipment and coconut products.
Continuing the upward momentum, textiles and garments exports grew at a higher rate contributing more than 85% of the export growth in August 2014 supported by a substantial improvement in lingerie exports. Further, the export of transport equipment increased largely due to the export of a cruise ship, while the increase of earnings on coconut exports was mainly led by the significant increase in kernel products.
However, exports of bunkering and aviation fuel, which account for a major share of petroleum products, continued to decline reflecting the heightened competition from major regional players. Also, export earnings from diamonds declined due to non-operation of a major diamond exporter, while exports of spices dipped due to a lower level of production during the year. Major export destinations during January to August 2014 were USA, UK, Italy, India and Germany accounting for around 50% of total exports.
Expenditure on imports increased by 16.9% to $1,725 million in August 2014, while on a cumulative basis, imports grew by 4.6% to $12,555 million during the first eight months of 2014. The increase in import expenditure in August was mainly due to the imports of refined petroleum products for higher level of thermal power generation compared to the corresponding month of 2013. Also, the imports of textiles and textile articles and motor vehicles for personal use increased considerably during August 2014. However, the substantial increase in textiles and garments exports over the imports of textiles and textile articles reflects the lower dependency on imported raw material and higher value addition in the garment industry.
The increase in import of motor vehicles for personal use during August 2014 was mainly due to the higher level of import of motor cars and motorcycles. Further, rice imports also increased significantly during the month as a result of a shortfall in domestic rice production during the year. During the first eight months of 2014, the main import origins were India, China, UAE, Singapore and Japan accounting for around 60% of total imports.
As the growth of imports weighed on the export earnings, the trade deficit widened to $733 million in August 2014, compared to $556 million in August 2013. However, on a cumulative basis, trade deficit during the first eight months of 2014 declined by 7.1% compared to the corresponding period in 2013.
