Contraction in earnings from key industrial exports:

Decline in export earnings

Earnings from exports declined by 5.1 per cent in November 2007, year-on-year, to US dollars 591 million following the expansion of 18-19 per cent in the two preceding months.

This decline in export earnings could be attributed to a contraction in earnings from key industrial exports including garments and textiles, rubber products, and diamonds and jewellery, the Central Bank said. Industrial exports declined by 13.8 per cent with garments and textiles, which constituted 40 per cent of the total exports, declining by 12.9 per cent.

Agricultural exports however, recorded a growth of 21.6 per cent, benefiting mainly from steadied earnings from tea. Despite the lower volume of exports, the strong demand from CIS and Middle Eastern countries raised the earnings from tea, with the highest ever price for tea being recorded in November 2007.

The cumulative export earnings from January-November 2007 grew by 11.3 per cent, year-on-year, to US dollars 6,877 million.

The expenditure on imports increased by 15.4 per cent, year-on-year, to US dollars 1,010 million, as a result of the expenditure on import of investment goods and intermediate goods increasing further.

International oil prices, which hit a record above US dollars 95 a barrel, was a major contributor to higher intermediate imports.

Amongst other intermediate goods in relation to which import expenditure increased were textiles and clothing and diamonds.

Amongst investment goods, import of machinery and equipment and building materials further increased, reflecting the growth momentum in the economy.

The expenditure on consumer goods, however, declined by 15.9 per cent in November 2007 as a result of lower import of sugar and motor vehicles, while wheat was not imported.

The cumulative expenditure on imports recorded an increase of 8.1 per cent, year-on-year, by end November 2007, and amounted to US dollars 10,142 million, the Central Bank said yesterday.

By end-November 2007, the overall balance of payments registered a surplus of US dollars 616 million, and the gross official reserves totalled US dollars 3,149 million (3.4 months of imports).