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Trade
deficit tops $ 2 b in four months as imports remain high
The
country saw its trade deficit top US$ 2 billion (over Rs.
200 billion) in just four months, as imports remain high,
despite exports lending healthy growth.
Except for February, Sri Lanka’s monthly imports so far
in 2008 have topped the one billion dollar mark, confirming
that the country is living beyond its means. While imports
rise month on month, exports in April saw a dip to its lowest
in three months. In April imports peaked to $ 1.2 billion,
up by 37% over the corresponding month of last year.
Expenditure on import of consumer goods, namely food, increased
significantly with significant increases in expenditure on
rice and sugar. Import expenditure on intermediate goods increased
by 38%, year-on-year, and contributed 64% to the increase
in import expenditure in April 2008, primarily due to significant
price increases in respect of crude oil and fertilizer. Imports
of investment goods recorded a growth of 33.5%, along with
increases in imports of transport equipment, machinery and
equipment as well as building materials.
Cumulative expenditure on imports during the first four months
of 2008 amounted to $ 4.53 billion, an increase of 37.4%,
year-on-year.
Exports on the other hand increased by 14.7%, year-on-year,
to $610 million, with agricultural exports and industrial
exports contributing 59% and 37%, respectively, to this growth.
Agricultural exports grew by 46.5%, year-on-year, in April
2008, with earnings from tea and minor agricultural product
exports recording significant growth. Export prices of tea
increased further in April 2008 and the average export price
was $4.00 a kilogram, the highest recorded up to then. Industrial
exports grew by 6.9%, year-on-year, with exports of garments
and textiles; food, beverages and tobacco; rubber products,
petroleum products and ceramic products expanding. Cumulative
exports recorded a growth of 11.3%, year-on-year, and amounted
to $ 2.48 billion for January-April 2008.
Consequently external trade resulted in the deficit in the
trade balance widening from $ 394 million in April 2007 to
$ 659 million in April 2008. The cumulative deficit in the
trade balance for January-April 2008 was $ 2.04 billion, compared
to $ 1.06 billion for the corresponding period last year.
The overall balance of payments recorded a surplus of $ 320
million for the period January-April 2008, resulting in the
gross official reserves increasing to $ 3.3 billion by end
April 2008, which is sufficient to finance around 3.3 months
of imports.
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