Choppy ride for trade

Confirming the continuity of the impact from the global recession, the plummet in Sri Lanka’s external trade persist.
As per latest trade data released by the Central Bank this week exports were down by 19% to US$ 2.6billion and imports dipping by 38% to $ 3.6 billion in the first five months of the year in comparison to the corresponding period of 2008.
However due to external trade heading south, the cumulative trade deficit decreased by 62% to $ 982 million during the first five months of 2009 from $2.6 billion in the corresponding period of 2008.
In May the trade deficit contracted for the fifth consecutive month by 64% to $175 million. Private remittances rose by only 3% to $1.38 billion during the first five months of 2009, from $1.2 billion. As a result, remittances during the first five months were $327 million (about 33%) in excess of the trade deficit.
Central Bank said in May export earnings dropped by 27.8% in May 2009, to $538 million, reflecting year-on-year reductions in industrial and mineral exports. However, agricultural exports, which accounted for 26% of total exports, grew by 2.5% during May 2009, mainly due to the increase in exports of traditional crops. The exports of tea, rubber and coconut increased by 3.9%, 24.8% and 47.9% respectively. Tea prices continued to fetch premium prices in the international market. At an average export price of $3.93 per kilo, it was almost on par with the levels maintained during this part of the year in 2008. Rubber and coconut prices, however, declined by 44.4% and 39.0%, respectively. Among the industrial exports, the earnings from the textiles and garments declined by 22.7% for the second consecutive month in May 2009, due to the lag effect of the global recession. Textiles and garments exports to the European Union and the United States decreased by 17.9% and 29.4% respectively, due to lower demand emanating from these countries.
Expenditure on imports declined by 42.1% to $713 million in May 2009, reflecting reductions in all three major categories of imports. Imports of consumer goods declined by 41.2% to $140 million, largely on account of lower commodity prices. While expenditure on sugar increased on account of higher prices amidst the global supply constraint, expenditure on other commodities, such as rice, wheat and dairy products declined in May 2009. Expenditure on non-food consumer goods declined by 36.8%, led by motor vehicles. Imports of intermediate goods declined by 42.6% in May 2009, mainly due to the lower expenditure incurred on petroleum imports. Imports of investment goods also declined by 43.8%, mainly due to the lower expenditure incurred on imports of building materials and machinery and equipment.