Exports regain in first nine months

Sri Lanka’s external sector recorded satisfactory progress in September 2013. The trade deficit continued to narrow during the first nine months this year as a result of a strong growth in exports, a Central Bank report stated.

The current account deficit declined, primarily due to the shrinking of the deficit in the trade account, higher inflows to the services account and an increase in private transfers.

Additionally, inflows to the financial account remained strong despite a volatile global financial market leading to a significant surplus in the BOP during the first three quarters of 2013, compared to the corresponding period in 2012.

The report stated that earnings from exports and expenditure on imports recorded significant year-on-year growth in September 2013. Earnings from exports grew 11.1 percent year-on-year to US $ 890 million, while expenditure on imports increased 22.8 percent to US $ 1,614 million in September 2013.

On a cumulative basis, during the first nine months of 2013, earnings from exports turned positive increasing by 0.3 percent, while expenditure on imports continued to contract by 0. 9 percent from the corresponding period in 2012.

Although, the trade deficit of the BOP increased significantly by 41.1 percent year-on-year to US $ 698 million in September 2013, the cumulative trade deficit during the first nine months of 2013 contracted by 2.1 percent to US $ 6,721 million, from US $ 6,869 million during the corresponding period of 2012.

Earnings from exports continued to accelerate in September 2013 recording positive growth in all major sectors. This growth was mainly led by a significant increase in earnings from industrial exports. Earnings from industrial exports increased on a year-on-year basis, by 12.4 percent to US $ 638 million in September 2013 mainly due to strong growth in textiles and garment exports, which increased significantly by 27.7 percent to US $ 387 million.

Garment exports to the EU and the USA, which are major export destinations, recorded a remarkable growth of 30.7 percent and 32.2 percent, in September 2013, reflecting the recovery in those economies. Meanwhile, earnings from rubber product exports increased by 28 percent, year-on-year to US $ 73 million, mainly due to the lower base.

Earnings from the export of machinery and mechanical appliances, transport equipment, chemical products, leather products and base metals also contributed to the growth in industrial exports. However, export of gems, diamonds and jewellery which recorded negative year-on-year growth throughout the year continued to contract by 23.4 percent in September 2013 mainly due to low international prices.