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Sri Lanka July trade gap narrows sharply

30 September 2015 02:48 am - 0     - {{hitsCtrl.values.hits}}

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  • July imports down 16.9% to     US $ 1, 534mn 
  • July exports down 2.6% US $ 932.1mn 
  • Cumulative imports up 1.9% US $ 11, 035mn
  • Cumulative exports down 0.9% 6, 347mn
  • Cumulative vehicle imports up 98.9% to US $ 744.4mn
  • Cumulative oil bill down 46.2% to US $ 1, 602.7mn
  • Cumulative sea food exports down 35.5%  to US $  100.9mn 

Sri Lanka trade gap in July narrowed a significant 32.3 percent year-on-year (yoy) to US $ 601.8 million with imports falling at a faster pace compared to exports. 

The Central Bank said the decision to allow greater flexibility in the determination of the exchange rate from 04 September, 2015 is expected to help reduce the trade deficit further while improving the country’s gross official reserves. 

However, the cumulative trade balance in the first seven months of the year increased 6 percent yoy to US $ 4.68 billion.

The Central Bank said July imports fell 16.9 percent yoy to US $ 1, 534 million mainly due to the base effect as July 2014 recorded the highest monthly import value after November 2012.

In addition, reduction in fuel import bill also contributed for the overall decline in import expenditure. 

The July fuel bill contracted 66.1 percent yoy to US $ 174.8 million.

The average crude oil import price, which was US $ 110.3 per barrel in July 2014 had nearly halved to US dollars 60.5 per barrel in July 2015. 

Despite a drastic drop in the fuel prices, Sri Lanka imported more vehicles in July as motor vehicle imports rose 107.1 percent yoy to US $ 147.9 million.

In the first seven months of 2015, Sri Lanka has imported motor vehicles to the tune of US $ 744.4 million compared to US $ 374.2 million in the same period of the previous year. Transport equipment imports also rose 60 percent yoy to US $ 80.8 million.

However, import expenditure on consumer goods, such as dairy products, clothing and accessories, sugar and confectionery and machinery and equipment, declined significantly in July 2015.

Import expenditure on textiles articles also fell 2.7 percent yoy to US $ 201 million. Fertilizer imports also fell 46 percent yoy to US $ 6.5 million.

On a cumulative basis, expenditure on imports during the first seven months of 2015 increased by 1.9 per cent, year-on-year, to US $ 11,035 million.

During the first seven months of 2015, the main import originating countries were India, China, Japan, UAE and Singapore, which accounted for about 60 per cent of the total imports
Meanwhile, July exports dropped 2.6 percent yoy to US $ 932.1 million amid both industrial and agricultural exports faltering. 

Except for transport equipment and petroleum products all other sub categories of industrial exports fell during the month.

Apparel exports, which account for 44 percent of total exports fell 0.3 percent yoy to US $ 413.1 million while rubber products exports, mainly consisting of tyres fell 9.9 percent yoy to US $ 71.8 million. 

Export earnings from transport equipment, petroleum products and animal fodder increased by 91.3 per cent, 42.2 per cent and 13.0 per cent, respectively, in July 2015.

Earnings from agricultural exports in July 2015 declined by 2.7 percent yoy, to US $245 million, led by significant declines recorded in tea and sea food exports.

Tea exports, which were severely affected by the lower demand from Russia and Middle East, declined in July 2015 for the 12th consecutive month, recording a drop of 14 percent yoy, reflecting declines in both export volume and export prices.

Export earnings from seafoods continued to decline owing to the restrictions on market access to the EU market. 

Accordingly, seafood exports to EU area dropped by 71 percent recording an overall decline of 32.5 percent yoy to US $ 15.1 million in the seafood category in July 2015. 

For the first 7 months, seafood exports fell 35.5 percent yoy to US $ 100.9 million. 

However, earnings from exports of spices, minor agricultural products and coconut kernel products recorded a positive growth partly offsetting the overall decline in agricultural exports.

On a cumulative basis, earnings from exports declined by 0.9 percent yoy to US $ 6347.6 during the first seven months of the year mainly due to the lower performance of agricultural exports despite the positive growth in industrial exports. The leading markets for merchandise exports of Sri Lanka during this period were the USA, the UK, India, Germany, Italy and China which accounted for about 55 per cent of total exports.



   Noteworthy foreign outflows ahead of Fed decision   

Considerable foreign outflows were seen from both government securities and the Colombo Stock Exchange up to August ahead of the expected US Federal rate hike, the Central Bank said.

Provisional figures showed that for the first 8 months of 2015, net foreign outflows from government securities increased to US$ 633.9 million compared to a net inflow of US$ 217.7 million year-on-year (yoy).

Long-term loan inflows to the government up to July fell sharply to US$ 115.3 million from US$ 644 million yoy.

The CSE only saw a net foreign inflow of US$ 6.4 million till August, with net outflows of US$24.8 million mainly from the secondary market.
The primary market saw net inflows of US$ 31.2 million till July.



  Tourism earnings up; remittances moderate  

Foreign exchange earnings from tourism grew healthily for August while worker remittances moderated in July, according to provisional figures of the Central Bank.

It estimated that receipts from tourism increased to US$ 265.2 million in August, growing 18.7 percent year-on-year (yoy). Tourist arrivals too increased 18.7 percent yoy to 166,610 visitors in August.

Total earnings from January to August this year increased to US$1.87 billion from US$1.76 billion, with a 17.1 percent yoy growth, as tourism arrivals too grew by 17.1 percent yoy to 1.17 million for the same period.

Foreign earnings from worker remittances for July decreased 1.2 percent yoy to US$ 599 million, while the January-July figures increased 1.6 percent yoy to US$ 4.03 billion.
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