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In November 2001 both exports and imports measured in US dollar terms declined, over the respective levels recorded in the corresponding moth in 2000. However, both declines were at lower rates than those experienced in October 2001. Following this trend, the monthly trade deficit too declined to US dollars 132 million compared to a deficit of US dollars 172 million in the corresponding month of 2000. Export earnings in US dollars terms declined by 16.9 per cent, while the expenditure on imports declined by a higher rate of 18.7 per cent compared with the corresponding month of 2000. Export earnings continued to be adversely affected by the slow economic growth in industrial countries which are the main buyers of Sri Lanka's exports. The declining trend in imports was largely attributable to the surcharge imposed on imports, the low demand arising from the slower economic growth and reduced petroleum prices.

The cumulative export earnings during the first eleven months of 2001 declined by 9.8 per cent, while the cumulative imports declined by a much higher rate of 18.8 per cent (15.0 per cent, when aircraft imports in 2000 were excluded). The sharper drop in imports than in exports led the trade deficit in the first eleven months of 2001 to decline to US dollar 1,058 million compared with a deficit of US dollar 1,847 million recorded during the first eleven months in 2000. This deficit is lower even when compared with the adjusted trade deficit of US dollars 1,549 million which excludes the value of three aircraft imported during the first eleven months of 2000.

Exports

The export earnings in November 2001 were US dollars 346 million compared with US dollars 417 million in November 2000. The cumulative export earnings during the first eleven months of 2001 were US dollars 4,426 million compared with earnings amounting to US dollars 4,906 million recorded during the corresponding period in 2000.

Earnings from textile and garment exports declined for the seventh consecutive month, by 19.2 per cent to US dollars 179 million in November 2001. This was the combined effect of a 12.3 per cent drop in volume and a 7.9 per cent drop in unit prices. The decline in textile and garment exports was largely attributable to a lower demand from USA and European countries. All other industrial exports together declined by 14.2 per cent reflecting lower exports of machinery, mechanical and electrical equipment (2.8 per cent), fish products (55 per cent), crustaceans and molluses (71.6 per cent), petroleum products (42 per cent), plastics (17.1 per cent) and tableware (8.6 per cent). However, earnings from rubber based products (1 per cent), travel goods (18 per cent), chemical products (19.2 per cent) and diamond (2 per cent) recorded improvements over November 2000.

Earnings from agricultural products declined by 6.3 per cent due to decreases in the exports of the three major plantation crops. Other major agricultural products recorded an increase of 9.5 per cent due to higher earnings from cinnamon, un-manufactured tobacco and pepper. Despite an increase in the export volume, earnings from tea at US dollars 61 million recorded a marginal decline in November 2001 due to lower international prices. During the first eleven months of 2001, tea production declined by 10.3 million kgs. largely due to adverse weather conditions but export volume increased by 9.2 million kgs. reflecting a draw-down of stocks. International prices of tea continued to remain lower than the previous year since April 2001, due to both higher world tea production and lower demand.

Imports

Expenditure on imports at US dollars 479 million declined by 18.7 per cent in November 2001, compared to a level of imports of US dollars 589 million in November, 2000. The expenditure on imports during the first eleven months of 2001 was US dollars 5,484 million, a decline of 18.8 per cent over the first eleven months of 2000. When adjusted for the aircraft imported in the months of January, May and June of 2000, the cumulative imports indicated a lower decline of 15 per cent.

The import of consumer goods declined by 22 per cent in November, 2001. Within this category, food and drink imports declined by 18.3 per cent due to low imports of sugar, milk products, fish products, lentils and potatoes. Imports of non-food consumer goods declined by 26 per cent. Within this category, motor cars and cycles recorded a substantial decline of 39.2 per cent of over November, 2000. Intermediate goods imports declined by 16.3 per cent as all major sub-categories of this category declined. Expenditure on petroleum products, chemical elements and compounds, paper and paper boards, dyes and colouring materials declined over November, 2000. Investment goods, declined by 21.7 per cent due to significantly low imports of machinery and equipment, transport equipment and building materials.

The overall result of these developments has been a substantial decline in the trade balance in the first eleven months of 2001 by US dollars 789 million to US dollars 1,058 million.

Source: Information Department, Central Bank of Sri Lanka.

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