|
Exports
suffer first decline in June; First half trade deficit tops
$ 3 b
Robust
growth in remittances helps achieve $ 390 m Balance of Payments
surplus
In
a development that appears negative, the country in June saw
its exports dip for the first time in eight months, while
first half trade deficit topped the US$ 3 billion mark.
Exports in June 2008, amounted to $654.6 million, down by
2% compared to June 2007, according to Central Bank data released
last week. The previous month-on-month decline was reported
in November 2007.
However, the Bank said cumulative earnings from exports during
January-June, 2008 recorded an increase of 9.8% and amounted
to $3,888 million.
The Bank said despite the decline in earnings from some industrial
exports, namely, food and beverages; garments and textiles,
and machinery and equipment, earnings from agricultural exports
increased by 34.6%, year-on-year, given the significant increase
in commodity prices in international markets and the premium
prices fetched by ‘Ceylon Tea’ in key markets.
“Thus, the growth in earnings from tea, coconut and minor
agricultural products negated the impact of the decline in
industrial export earnings to some extent. Agricultural exports
are expected to continue to perform better, in terms of volumes
as well as prices, and industrial exports are expected to
rebound from the one-off decline in June,” the Bank added.
Imports in June 2008 amounted to $1,159 million; an increase
of 39.4%. However, non-oil imports amounting to $819 million,
recorded a slower growth of 16.9%. While intermediate goods
accounted for about 73% of the growth in expenditure on imports
in June, 2008, imports of petroleum products accounted for
87% of the increase in this sector. Expenditure on imports
is expected to be lower during the rest of the year, as the
petroleum prices continue to dwindle. Fertilizer and diamonds
were among the other intermediate imports that increased in
June, 2008. Expenditure on imports of consumer goods grew
by 29.6%, largely due to higher expenditure on food imports.
Imports of investment goods grew by 17.7%, with imports of
machinery and equipment and building materials expanding.
Higher growth in investment goods reflect the implementation
of large scale infrastructure development projects funded
by capital flows to the Government and the private sector
by way of foreign direct investment.
The cumulative expenditure on imports during the first six
months of 2008 amounted to $6,972 million; an increase of
35.6% over the corresponding period last year. Non-oil imports
during that period amounted to $5,180 million, which is an
increase of 23.8% over the corresponding period last year.
These developments in external trade resulted in a deficit
in the trade balance amounting to $504 million for June 2008.
For the first six months of 2008, the deficit in the trade
balance amounted to $3,084 million, compared to the deficit
of $1,603 million for the corresponding period last year.
However, private remittances during the period January-June
2008, which amounted to $1,460 million, and the higher capital
and financial flows more than offset the deficit in the current
account, as a result of which, the overall balance of payments
recorded a surplus of $390 million by end-June 2008. Consequently,
the gross official reserves increased to $3,433 million by
end June, 2008, up from U.S. dollars 3,062.5 million in December
2007, which was sufficient to finance around 3.1 months of
imports.
|
|
