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.