Export earnings increase in October

Earnings from exports, which took on an increasing trend since April 2009, increased in October after a brief setback in September.

The Central Bank

Expenditure on imports also increased sharply in October 2009. However, on a year-on-year basis, both exports and imports declined by 4.9 percent and 18.0 percent, respectively, in October 2009 a Central bank media release said .

Export earnings declined to US dollars 629 million, recording the lowest year-on-year decline thus far, this year. The largest contribution to this decline came from the industrial exports, which declined by 8.2 percent mainly due to lower exports of garments and textiles, food, beverages and tobacco, machinery and equipment.

Exports of rubber products, however, increased by 5.3 percent to US dollars 40.6 million during this month, led by increased exports of vulcanized rubber products. Within the agricultural exports, however, tea continued to perform well.

Earnings from tea exports grew by 8.0 percent to US dollars 117 million due to the record prices fetched by Ceylon tea due to lower production by the three major tea producing countries (India, Kenya and Sri Lanka).

The lower export quantities reflect labour unrest, weather related factors and seasonal buying patterns. Despite the 2 percent year-on-year increase in rubber exports, earnings from rubber exports declined by 19.5 percent in October mainly due to the lower export prices compared to October 2008. Earnings from minor agricultural crop exports increased by 30.7 percent in October 2009. Cumulative earnings from exports during the first ten months of 2009, declined by 15.6 percent to US dollars 5,748 million compared to the corresponding period of 2008.

As a result, the trade deficit contracted in October 2009 by 33.6 percent to US dollars 370 million. The cumulative trade deficit decreased by 57.1 percent to US dollars 2,217 million during the first ten months of 2009 from US dollars 5,171 million in the corresponding period of 2008. Workers’ remittances increased by 12.9 percent to US dollars 2,774 million during this period. As a result, Workers’ remittances during the first ten months of 2009 were US dollars 557 million (about 25 percent) in excess of the trade deficit.