August trade deficit widens 8% despite higher export gains

Sri Lanka’s trade deficit widened to US$ 782.8 million this August, an 8 percent fall Year-on-Year (YoY) as a higher level of imports held back gains made by exports of plantation industry products, Central Bank data indicated.

Imports for the month increased 8.3 percent YoY to US$ 1.65 billion. Consumer goods imports fell 6.3 percent YoY to US$ 393.7 million, mainly due to a 53.7 percent YoY slowdown in importation of vehicles, valued at US$ 74.1 million.
Food and beverage imports increased by 17.8 percent YoY to US$ 142.6 million, mainly due to importation of US$ 39.7 million in sugar and confectionary products, a growth of 80.3 percent YoY due to increases in both price and volumes.

Intermediate goods imports increased 11.5 percent YoY to US$ 824 million, with textiles and textile articles contributing US$ 220 million, at a growth rate of 42.7 percent YoY .
Fuel imports declined by 3.2 percent YoY to US$ 180.6 million. Imports of diamonds, precious stones and metals increased to US$ 53.8 million from US$ 3.9 million, a 1,274.4 percent growth YoY. While gold importation was relaxed in June, gold imports in August increased by just 34.7 percent YoY.
Investment good imports increased 18.1 percent YoY to US$ 429.7 million due to increased construction activity in the country, with the only decline in imports coming from the transport equipments subcategory, falling 17.6 percent YoY to US$ 66.3 million.
Exports on the other hand grew by 8.4 percent YoY to US$ 866.3 million due to lower levels of exports experienced in August 2015, and helping to record the second instance of exports growth so far this year since February.

The country’s leading industry textiles and garments recorded a 1.7 percent YoY decline in exports for the month valued at US$ 393.4 million, despite a 9 percent YoY gain in the key market of Europe ahead of regaining preferential access to the European Union.

Rubber products earned 23.9 percent more YoY in exports, with US$ 68.2 million, while food and beverage product, as well as machinery and mechanical appliance exports increased by 47.9 percent and 38.6 percent respectively attracting revenue above US$ 25 million in each case.
Earnings from gems and jewellery exports fell 7.2 percent YoY to US$ 20.7 million.
Total industrial exports grew by 5.8 percent YoY to US$ 654.3 million. Agricultural exports meanwhile grew 17 percent YoY to US$ 208 million, with tea contributing a majority with US$ 108.9 million, growing 18.6 percent YoY. For the first 8 months of 2016, the trade deficit widened to US$ 5.54 billion, 1.6 percent higher YoY. Imports for the 8 months fell 1.6 percent YoY to US$ 12.4 billion, with textile and textile articles, machinery and equipment and building materials recording growth in major categories. Exports from January to August fell 4.1 percent YoY to US$ 6.87 billion, with textiles and garments recording the only growth in major export industries, with a 3.6 percent YoY to US$ 3.33 billion.