Sri Lanka’s export earnings rose for the second consecutive month in September 2016 to US $ 898 million, recording an increase of 5.7 percent from a year ago, according to latest Central Bank data.
Earnings from exports had been falling for 17 months in a row starting from March 2015 before they picked up in August.
“All major categories of exports showed positive growth rates mainly sub sectors of transport equipment, food, beverages and tobacco and rubber products,” the Central Bank stated.
However, during the nine months to September, the exports declined by 3.0 percent Year-on-Year (YoY) to US $ 7.76 billion.
Sri Lanka’s exports were partly affected by the slump in global commodities prices, which was triggered mainly by the sharp fall in the crude oil prices and the slowdown in the Chinese economy, world’s second largest consumer of goods and services.
However, Sri Lanka’s shallow export-oriented manufacturing sector was the biggest reason for the dismal performance in exports.
Sri Lanka’s annual export earning is around US $ 10 - 11 billion, half the size of its import bill.
However, the island nation targets to triple its exports earnings to US $ 30 billion by 2025 as it pins its hopes on potential preferential market access to around 3 billion people by this time next year through proposed free trade agreements with China and Singapore and a deeper trade and services agreement with India.
The country further expects to regain GSP Plus concession for its exports to the European Union by the second half of next year.
Meanwhile, the country’s import bill declined by 2.5 percent YoY to US $ 1.54 billion in September, largely due to the slowdown in consumption related imports as vehicles for personal use sharply declined in response to toughened conditions for vehicle imports.
Under the intermediate category, the fuel imports declined but the continuity of further declines towards next year is uncertain as the Organisation of the Petroleum Exporting Countries (OPEC) last week reached a difficult consensus to cut the production by 1.2 million barrels per day, effective from January 2017.
During the nine months to September, the imports contracted by 1.7 percent YoY to US $ 13.95 billion.
As a result, the overall trade deficit narrowed by 12 percent YoY to US $ 645 million in September but the trade deficit for the nine months to September edged up by 0.02 percent YoY to US $ 6.18 billion.