Agriculture props Lankan exports to $761m in August

The country’s export earnings grew by 16.6% in August 2008, year-on year, to $761 million in August 2008 fuelled by the agricultural exports, which grew by 32%.

Central Bank said yesterday this was mainly brought about by the high prices garnered by Ceylon tea and natural rubber in the international commodity markets and the remarkable performance of the minor agricultural exports.

For example Sri Lanka’s tea fetched $4.26 per kilogram, reflecting an increase of 29% since the beginning of the year, whilst rubber prices increased to $3.02 per kilogram in August 2008, depicting a 31% rise since January 2008.

The Bank also said having generated $208 million since the beginning of the year, the minor agricultural products such as fruits, vegetables and spices are increasingly becoming an important source of export earnings for the country.

Exports of apparel, rubber based products, petroleum, diamonds and jewelry, led the industrial exports to grow by 16% in August 2008. The food, beverages and tobacco products continued the declining trend although fish exports provided a shield against the slowdown. The cumulative export earnings in the first eight months of 2008 amounted to $5,498 million, recording a growth of 12.7% over the corresponding period last year. Expenditure on imports grew by 35% in August 2008 to $1,262 million. Petroleum imports compounded by the fertilizer and chemical imports were the key drivers of this growth although the oil prices in the international markets peaked in early July and took on a descending trend thereafter. Consumer goods increased by 19% in August 2008.

Imports of rice and sugar increased, while imports of wheat and flour declined.
Imports of motor vehicles, whose growth averaged at 34% in the period upto August 2008, grew by a mere 5% in August 2008 partly due to the withdrawal of duty free vehicle permits issued to the public servants. There was a marginal growth in imports of investment goods. The cumulative expenditure on imports during this period amounted to $9,529 million, which reflects an increase of 35.3% over the corresponding period of 2007.

Central Bank said that reflecting these developments, the trade deficit widened by 76% to $501 million in August 2008. As a result, the deficit in the trade balance expanded to $4,031 million during the first eight months of the year, compared to the deficit of $2,166 million for the corresponding period previous year. However, private remittances during the period January-August 2008, which amounted to $1,975 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-August 2008. Consequently, the gross official reserves increased to $3,424 million by end August, 2008, up from U.S. dollars 3,062.5 million in December 2007, which was sufficient to finance around 3.0 months of imports.