Year-on-year growth of 20.4 percent:

Export earnings rise to US $ 854 m

The external trade continued its growth momentum in September 2011, reflecting the expansion in economic activities. Earnings from exports rose to US dollars 854 million, reflecting a year-on-year growth of 20.4 percent, while the expenditure on imports increased by 61.3 percent to US dollars 1,759 million in September 2011.

The main contributors to increased industrial exports are garments and textiles, diamond and jewellery, rubber products and food, beverages and tobacco. Earnings from exports of textiles and garments increased by 13.7 percent while diamond and jewellery increased considerably by 88.7 percent in September 2011.

The exports of rubber products increased by 37.3 percent for the same period. Exports of food, beverages and tobacco increased by 48 percent in September 2011 where significant contributions came from tinned and bottled fruits, animal fodder and fruits and vegetable juices. Earnings from agricultural exports also increased, recording growth in all key sub-categories mainly due to increases in prices.

The average export price of tea increased by 3.9 percent to US dollars 4.57 per kg whereas, the average rubber prices rose by 40.3 percent to US dollars 4.96 per kg in September 2011 compared to corresponding month of 2010. Earning from exports of coconut increased sharply by 75.6 percent in September, 2011 against the same month of 2010 owing to the increase of both volumes and prices of desiccated coconut, copra and coconut oil. Earnings from minor agricultural exports also grew by 12 percent in September 2011.

Expenditure on imports is mainly driven by increases in intermediate and investment goods. The intermediate goods imports increased year-on-year by 55.5 percent led by petroleum imports in September 2011. The higher petroleum import expenditure is mainly due to the higher average import price of crude oil of US dollars 108.43 per barrel in September 2011 compared to US dollars 75.54 per barrel for the corresponding month of 2010.

Imports of investment goods increased substantially by 94.3 percent in September 2011, led by higher expenditures on imports of machinery and equipment, transport equipment, and building materials. The increase in investment good imports are partly due to the government project related import expenditure. Expenditure on imports of consumer goods increased by 44.8 percent during the month of September 2011, mainly due to higher imports of non-food consumer goods, of which nearly 48.8 percent comprised of motor vehicles.

In cumulative terms, for the first nine months of 2011, the earnings from exports and expenditure on imports have increased by 27.7 percent to US dollars 7,820 million and 51.8 percent to US dollars 14,685 million, respectively. As a result, the trade deficit expanded to US dollars 6,865 million. Part of the trade deficit is on account of government related project imports which have been funded mainly by foreign loans obtained by the Government. For the first nine months of 2011, total inflows to the government, including the proceeds of the International Sovereign Bond issue, amounted to US dollars 3,430 million.

For the first nine months of 2011, earnings from tourism grew at a healthy rate of 48 percent to US dollars 580 million compared to the corresponding period of 2010. Average earnings per tourist per day increased to US dollars 97 for the period under review from US dollars 88 for the same period in 2010.

The tourist arrivals for the first nine months of 2011 increased by 34.3 percent to 598,006 compared to first nine months of 2010. The majority of tourists numbering to 226,990 arrived from Western Europe and the arrivals from Middle-East, East Asia, South Asia and Australasia recorded healthy growths during the first nine months of 2011. Heading to the peak months of the year, tourist arrivals in 2011 are projected to be around 850,000.

The cumulative inflows on account of workers’ remittances grew at 25.9 percent to US dollars 3,782 million for the first nine months of 2011. The expansion in exports of services and increased workers’ remittances helped contain the impact of the trade deficit on the current account.

For the first nine months of 2011, the deficit of the current account stood at approximately US dollars 3,058 million.

Gross official reserves, excluding Asian Clearing Union (ACU) balances, increased to US dollars 7,095 million by end September 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 8,584 million by end September 2011 from US dollars 8,035 million by end 2010. In terms of months of imports, gross official reserves and total external reserves by end September 2011 is equivalent to 4.6 months and 5.6 months, respectively.