The trade deficit in November widened by US $ 186 million or 35 percent year-on-year (yoy), much slower than the previous month despite exports continuing to go south, data released by the Central Bank showed.November exports income fell 10.7 percent yoy to US $ 921 million, largely due to base effects. The import expenditure rose by a moderate 4.8 percent yoy to US $ 1.65 billion, as falling world oil prices took effect.
In October, the trade gap rose by a staggering 140 percent to US $ 852 million as commodities exports dipped amid surge in imports.On a cumulative basis, the trade gap rose by 6.6 percent for the nine months to US $ 7.5 billion against the corresponding period in 2013. Cumulative exports rose 7.5 percent to US $ 10.1 billion and imports rose to US $ 17.6 billion.The United States and the European Union, the two biggest buyers of Sri Lankan-made apparel saw demand shortfalls during the month by 17.8 percent and 16.6 percent respectively.
Total apparel exports earnings t hus narrowed 14.4 percent yoy, impacting the total industrial exports earnings to drop 11.8 percent yoy to US $ 684 million.
Sri Lanka’s lopsided foreign policy is now being re-balanced and the new unity government is expected to corporate more with US and Europe for better political and economic ties.
An attempt is also being made to win back the GSP+ tariff concession from the European Union.Earnings from rubber products exports declined 16.7 percent yoy mainly due to the reduced rubber tyre exports in November ahead of the holiday season. Agricultural exports declined 4.4 percent yoy to US $ 233 million, as the tea exports fell 4.5 percent yoy to US $ 138 million due to lower prices. However, the nine months’ tea exports were up 6.8 percent yoy to US $ 1.49 billion.Meanwhile, “the increase in import expenditure in November 2014 was mainly led by imports of consumer goods with significant increase in imports of personal motor vehicles such as motor cycles and motor cars as well as rice imports,” the Central Bank said.
The former United People Freedom Alliance government promised motorcycles for selected public sector servant categories and slashed import duties of motor cars in its budget presented in October.Imports expenditure on vehicles rose 76 percent yoy to US $ 94.1 million in November and the cumulative expenditure for the eleven months was US $ 785 million, up 47.3 percent.Country’s fuel bill declined 26.5 percent yoy to US $ 267 million in November as a result of the decline in world oil prices. Global oil prices have declined more than 50 percent since last June.During the eleven months, Sri Lanka imported US $ 4.3 billion worth of oil, up from US $ 3.8 billion in the previous year.Investment goods imports however declined by 10.4 percent yoy to US $ 371 million, demonstrating the arbitrary nature of the development the country experienced.
Meanwhile, the Balance of Payment (BoP), which reflects the overall balance of dealing with the rest of the world shows a positive US $ 1.6 billion surplus by the end of November compared to a surplus of US $ 582 million recorded in the corresponding period in 2013.Earnings from tourism are estimated to have grown by 17.5 percent yoy to US $ 173 million in November while on a cumulative basis, the earnings have grown by 29.2 percent yoy to US $ 1.95 billion.
Meanwhile the worker remittances, country’s highest foreign income earner, rose 9.1 percent yoy to US $ 619.3 million in November while for the eleven months it rose 8.7 percent to US $ 6.3 billion.During the eleven months of this year, the government received a total of US $ 1.4 billion worth of long term loans compared to US $ 1.5 billion during the same period in 2013.
The Colombo Stock Exchange received portfolio flows amounting to US $ 150.2 million during the eleven months. November figure alone amounted to US $ 43.3 million.Further, inflows to licensed commercial banks and licensed specialized banks during the first eleven months in 2014 amounted to US $ 450 million.Meanwhile, the government securities market recorded a net outflow of US $ 104.3 million by end November 2014.
Despite the Central Bank’s gross external reserves position standing at US $ 8.3 billion as at end November, the latest data showed that the bank sold as much as US $ 473 million in November and December to defend the falling rupee.As of last week, the country’s reserves were down 6 percent to US $ 7.37 billion.