Buoyant external sector performance

The external sector remained buoyant in the first eight months of 2011 reflecting the expanding domestic economic activities, growing external trade, inflows on account of remittances and services and growing investor confidence. Both earnings from exports and expenditure on imports increased further on a year-on-year basis in August 2011, the Central Bank said.

Earnings from exports reached a level of US dollars 952 million, an increase of 19.1 percent, compared with corresponding month of August 2010. Earnings from exports of textiles and garments increased by 18.4 per cent while rubber products continued to record a high growth rate of 47.4 percent. Exports of food, beverages and tobacco increased considerably by 51.1 percent in August 2011 where significant contributions came from tinned and bottled fruits, salted fish and animal fodder exports. Exports of diamond and jewellery increased by 45.3 percent. Agricultural exports increased by 14.4 percent, where minor agricultural exports reported higher earnings.

The expenditure on imports increased by 66.5 percent to US dollars 1,837 million in August 2011 compared to the corresponding month in 2010.

Intermediate goods, which increased by 83.8 percent to US dollars 1,071 million, where petroleum imports, contributed significantly.

Imports of investment goods increased by 65 per cent to US dollars 435 million in August 2011, led by higher expenditures on imports of machinery and equipment, transport equipment and building materials.

The imports of consumer goods also increased by 31.6 percent in August 2011. Food and beverages imports, which accounted for 8.4 percent of total imports, increased by 24 percent in August 2011. For the first eight months of 2011, the cumulative earnings from exports and expenditure on imports have increased by 28.6 per cent to US dollars 6,966 million and 50.6 percent to US dollars 12,926 million, respectively.

As a result, the trade deficit stood at US dollars 5,960 million.

Earnings from tourism grew at a healthy rate of 49 per cent to US dollars 522 million during the first eight months of 2011 compared to the corresponding period of 2010, while cumulative inflows on account of workers’ remittances grew at 27.2 percent to US dollars 3,381 million during the same period. As a result, the deficit of the current account stood at US dollars 2,262 million for the period in consideration. Gross official reserves, excluding Asian Clearing Union (ACU) balances, increased to US dollars 8,051 million by end August 2011 from US dollars 6,610 million by end 2010.

Total external reserves, which includes gross official reserves and foreign assets of commercial banks, also increased to US dollars 9,293 million by end August 2011 from US dollars 8,034 million by end 2010.

In terms of months of imports, gross official reserves and total external reserves by end August 2011 were equivalent to 5.4 months and 6.3 months, respectively.