Export earnings hit $ 565 million in June

The cumulative export earnings and import expenditure during the first half of 2009 amounted to US dollars 3,189 million and US dollars 4,437 million, resulting in a trade deficit to US dollars 1,249 million, reflecting a 59.9 percent contraction compared to the corresponding period of 2008.

Private remittances increased by 5.4 percent from US dollars 1,505 million recorded during the first half of 2008, to US dollars 1,586 million in the corresponding period of 2009. As a result, remittances during the first half of 2009 were US dollars 337 million (about 27 percent) in excess of the trade deficit.

The release said earnings from exports decreased by 13.7 percent in June 2009, year on year basis. However, the rate of decline in exports, slowed down in June compared to the notably high declines in April and May. The largest contribution to this decline was from the industrial sector (73 percent) followed by the agriculture sector. Industrial exports declined by 13.5 percent to US dollars 420 million in June 2009, led by lower exports of rubber based products, textiles and garments and petroleum, owing to the impact of the global economic slowdown. However, apparel exports indicate a recovery in the second half as order books look healthy for the rest of the year.

The exports of rubber based products took the brunt of the impact as it was affected by the slowdown in the automobile, construction and transportation sectors. All other categories of exports also declined in June 2009, except for food and beverages, which was supported by enhanced exports of seafood, animal fodder and other food preparations. Agricultural exports declined by 15.2 percent to US dollars 137 million mainly due to the decline in tea exports by 10.8 percent to US dollars 105 million.

The lower export of tea was mainly due to decline in production. Demand for Ceylon tea, however, continues to be high, as is evident by its high prices, which are almost on par with the levels maintained at the height of the commodity price boom. In terms of volumes, exports of rubber and coconut products have increased, in June 2009, year-on-year. Mineral exports recorded a moderate growth of 8.8 percent due to the 14.8 percent increase in gem exports. The cumulative earnings from exports have declined by 18.0 percent to US dollars 3,189 million during the first half of 2009.

Expenditure on imports declined by 30.3 percent to US dollars 832 million in June 2009. Except for the expenditure on sugar imports, which increased by 42.7 percent due to the upward trend in international sugar prices owing to global supply constraints, expenditure incurred on all other subsectors of imports, declined. The largest contribution (64 percent) to the overall decline was from the intermediate goods, followed by the investment goods (20 percent).