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The decline in exports and the significant increase in imports during the last four months in 2002 in Sri Lanka have resulted in a significant increase in the trade deficit compared to the previous quarter in 2002, according to the Quarterly Review of the economy of Sri Lanka published by the International Centre for Ethnic Studies (ICES).

The total imports during the final quarter were the highest quarterly figure during 2002, while total exports were the second largest quarterly performance. Despite the significant rise in the trade deficit the gross official foreign exchange reserves rose considerably during the fourth quarter, the report said.

This was made possible due to the significant increase in foreign remittances received, rise in income from tourism and enhanced foreign aid payments.

Net foreign remittances increased by over 50% during the last quarter compared to the previous quarter. This was the best quarterly performance in the past two years. Total remittances received during 2002 were 17% higher than these received in 2001.

The reason for the huge rise in remittances during the fourth quarter could have been due to the impending war on Iraq and consequent political uncertainty in the west Asian region.

Income from tourism also increased considerably during the final quarter of 2002, which is not surprising, as it was the beginning of the tourism season. Tourism earnings in the last quarter were more than double that of the fourth quarter 2001.

Industrial exports had a mixed monthly performance during the quarter under review. It increased marginally in October compared to the previous month but declined in November and then considerably increased in December.

Industrial exports increased by 2% in October, declined by 7% in November and then shot up by 40% in December compared to the previous month.

However, quarterly industrial exports dropped from USD 1,125 million in the third quarter to USD 1,015 million in the fourth quarter, which is a 10% drop. Nevertheless it was a far better performance than the first two quarters of 2002 which recorded USD 802 million and USD 688 million.

Trade deficit of USD (-) 458 million during the last quarter of 2002 was significantly higher than during the third quarter. This was due to a 9% drop in exports and 17% rise in imports during the fourth quarter compared to the third quarter.

Total exports during the fourth quarter were UDS 1,281 million, which was 9% less than in the third quarter. Total imports during the fourth quarter were USD 1,739 million, which was 17% higher than in the third quarter. The trade deficit of the last quarter was the second largest quarterly figure during 2002. (CNK)

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