Sluggish export performance needs urgent attention - Experts
Policy makers should pay urgent attention to stimulate export growth
which has been sluggish for over a year, trade experts said.
Cumulative trade deficit as at end October 2015 increased by 2.5
percent mainly due to the subdued export performance as a result of
depressed global demand, a Central Bank report said.
Earnings from exports at US dollars 847.3 million in October 2015
declined by 6.0 percent, year-on-year, reflecting lower earnings from
exports of all major categories mainly due to weak global demand.
Tea, rubber products and garments exports contributed largely to the
overall decline in exports. The continued decline in demand for tea from
Russia and the Middle East mainly caused export earnings to decline
significantly by 11.2 percent, year-on-year in October 2015.
As a result, the average export prices of tea decreased by 16.7
percent to US dollar 4.11 per kilogram during the month compared to US
dollars 4.93 per kilogram recorded in October 2014.
Export earnings from garments, which contribute nearly 43 percent to
total exports, declined by 3.6 percent in October 2015, reflecting
significantly lower exports to EU markets.
Earnings from rubber product exports continued to weaken and recorded
an 18.7 percent year-on-year decline in October reflecting a substantial
reduction in global demand.
Lower export earnings from gems, diamonds and jewellery, petroleum
products and sea food also contributed considerably to the overall
decline in exports.
However, earnings from spice exports recorded a continuous growth so
far this year.
On a cumulative basis, earnings from exports declined by 3.9 percent
to US dollars 8,843 million during the first ten months of 2015,
reflecting a significant decline in earnings from tea, rubber products
and sea food exports.
The leading markets for merchandise exports of Sri Lanka during the
first ten months of 2015 were the USA, UK, India, Germany and Italy
accounting for about 51 percent.
Import performance. Continuing the declining trend recorded in the
preceding three months, expenditure on imports decreased by 6.4 percent,
year-on-year, to US dollars 1,638.3 million in October 2015. The largest
contribution for this reduction had come from fuel imports, followed by
rice and textile and textile articles. Despite the increase in import
volumes of both crude oil and refined petroleum, the fuel import bill
declined by 30.5 percent in October 2015 reflecting the substantial
decrease in oil prices.
The average import price of crude oil declined to US dollars 49.3 per
barrel in October 2015 compared to US dollars 99.4 per barrel recorded
in October 2014. In line with the reduction recorded in garment exports,
import expenditure on textile and textile articles declined by 21.0
percent during the month.
Rice imports declined by around 98 percent in October 2015,
year-on-year, reflecting the base effect of significantly high rice
imports recorded in the previous year owing to lower domestic supply.
Meanwhile, wheat and diamond imports also declined significantly.
However, imports of consumer durables continued to increase in
October 2015, driven mainly by personal vehicles. Expenditure on
importation of personal vehicles increased by 23.6 percent,
year-on-year, higher growth in the import of motor cars despite the
decline recorded in import of motorcycles. Imports of trishaws also
increased by more than two-fold in October 2015.