Earnings from exports grew 51.9% in February

The trade deficit in February expanded by 9.1 percent, year-on-year to $ 376 million the latest statistics released by the Central Bank said. However, the cumulative trade deficit contracted by 1.2 percent in the first two months of 2011 compared to the corresponding period of 2010, year-on-year as earnings from exports grew by 51.9 percent while expenditure on imports rose by 25.2 percent.

Export earnings in February increased by 36.8 percent year-on-year, to $ 860 million led by exports of textiles and garments, petroleum and rubber products. Expenditure on imports increased by 27.0 percent to $ 1,236 million during the month, mainly due to increases in imports of motor vehicles, petroleum, textiles and garments and machinery and equipment.

The Industrial sector dominates export revenue and shows resilience in apparel exports under new adverse market conditions in the EU market in the absence of GSP+ trade concessions.

The largest contribution to the increase in exports revenue comes from garments of which the EU and USA accounted for 54.8 percent and 35.1 percent.Exports of petroleum products increased by 274.7 percent reflecting higher volumes and prices, compared to February 2010. Earnings from exports of rubber products increased by 70.4 percent, year-on-year, reflecting high levels of domestic value addition amidst higher demand in the international market. While earnings from exports of machinery and equipment increased, those from food, beverages, tobacco, diamonds and jewellery declined.

Earnings from agricultural exports grew in February mainly due to the higher prices that prevailed in the international market. The average export prices of tea and rubber remained high at $ 4.68 per kg and dollars 5.35 per kg.

However, rubber export volumes remained low at 4.9 million kg mainly due to tighter supply as well as the increased demand from the domestic industries for the manufacture of rubber based products.

Earnings from minor agricultural exports increased by 16.2 percent to $ 31 million in February, led by the high prices of cocoa products, essential oils and unmanufactured tobacco.

Expenditure on imports of intermediate goods increased in February led by higher petroleum prices amidst geopolitical uncertainties. The average import price of crude oil increased by 31.9 percent to $ 103.18 per barrel in February. Expenditure on fertiliser and textile imports also increased during the month.

Expenditure on imports of consumer goods increased in February led by non-food consumer goods, particularly, motor vehicles and electrical equipment. Import expenditure on food and drink decreased in February due to the lower import volumes of rice, sugar and wheat. Investment goods imports increased in February reflecting increases in the machinery and transport equipment categories.

During February 2011 workers’ remittances increased by 26.8 percent to $ 393 million over that of 2010.

The gross official reserves continued to remain above the targeted level and stood at $ 7.0 billion by end March without Asian Clearing Union (ACU) balances. Based on the previous 12-month average expenditure on imports of dollars 1,210 million per month, the gross official reserves without ACU balances were equivalent to 5.8 months of imports.