Trade deficit contracts in November

Favourable developments in the external sector continued in November 2013, with a sharp contraction of the trade deficit, leading to an improvement of the overall balance.

Earnings from exports increased substantially, reflecting gradual recovery in export destination countries, while expenditure on imports declined.

Accordingly, the current account deficit narrowed, and was strengthened further as a result of the increase in inflows from workers’ remittances and tourism.

Meanwhile, inflows to the financial account also increased during the period ending November 2013, leading to a surplus in the Balance of Payments (BOP), compared to the deficit recorded in the corresponding period of 2012.

Trade Account of the BOP continuing the increasing trend observed from June 2013, earnings from exports surpassed the US $ 1 billion mark for the second consecutive month in November 2013.

Earnings from exports increased by 24.7 percent in November 2013, while expenditure on imports declined by 14.1 percent compared to the corresponding month in 2012.

Consequently, the trade deficit contracted significantly by 43.5 percent to US $ 616 million. On a cumulative basis, earnings from exports during the first eleven months of 2013 grew by 5.6 percent, while expenditure on imports contracted by 2.5 percent compared to the corresponding period in 2012.

The cumulative trade deficit contracted by 10.7 percent to US $ 7,831 million, during the first eleven months of 2013 compared to the corresponding period of 2012. Earnings from exports in November 2013 reached US $ 1,032 million.

Industrial exports, which account for more than three fourths of total export earnings, increased by 22.6 percent on a year-on-year basis to US $ 776 million in November 2013.

The leading driver of growth in the industrial sector was textiles and garments.

Earnings from export of textiles and garments grew by 35 percent year-on-year to US $ 491 million in November 2013, the highest monthly value of export of textiles and garments ever recorded.

Export of garments to the EU and USA, the major export destinations of garments, grew by 16.7 percent and 58.7 percent in November 2013, reflecting the recovery in those economies and seasonal demand.

Meanwhile, export of machinery and mechanical appliances grew by 54 percent, year-on-year.

Earnings from rubber product exports increased by 10.6 percent, year-on-year, to US $ 83 million in November 2013, mainly due to an increase in the export of rubber tyres. Apart from these, leather, travel goods and footwear, wood and paper products, base metals and plastics and articles also recorded positive growth. Earnings from agricultural exports rose by 28.3 percent, year-on-year, to US $ 244 million in November 2013 due to an increase in export of tea followed by spices. Earnings from tea exports increased by 14.4 percent to US $ 144 million in November 2013, due to a 16.2 percent increase in the earnings from the export of spices recorded a remarkable growth of 73 percent to US $ 35 million led by pepper and cinnamon exports.

Continuing the strong performance recorded since June 2013, the volume of pepper and cinnamon exports increased substantially by 186.6 percent and 24.4 percent, in November 2013 compared to the corresponding month of the previous year.

Export of coconut, seafood and minor agricultural products also recorded healthy growth.