Trade balance increases
The decelerating trend in the trade balance continued into August
2012. The trade balance recorded a year-on-year increase of 6.3 per cent
for the first eight months of 2012. The deceleration in the trade
balance reflects the decline in imports since April this year, amidst
the slowing down of exports.
Policy measures adopted by the government and the Central Bank
earlier this year, have resulted in imports declining from the high
levels recorded for last year. Waning global demand along with faltering
global economic activity, as well as lower prices for several key items
exported in view of the sharp decline in the prices of commodities such
as cotton and rubber, which constitute key inputs into these exports,
have resulted in exports slowing down.
In August 2012, expenditure on imports of both consumer goods and
intermediate goods declined while expenditure on imports of investment
goods recorded an increase, on a year-on-year basis. The decline in
consumer goods imports led the overall decline in imports. While
expenditure on imports of food and beverages as well as non-food
consumer goods declined, vehicle imports, which declined by 54 per cent,
year-on-year, made the largest contribution towards the decline in
expenditure on consumer goods imports.
With respect to imports of intermediate goods, expenditure on imports
of textiles, which have accounted for about 10 per cent of total
imports, decreased in August, partly reflecting the lower prices in the
world market for cotton.
Amongst other items classified under imports of intermediate goods,
diamonds, gold and other precious and semi-precious metals; chemical
products and plastic articles, were items which made a significant
contribution towards the decline in expenditure on imports.
Fertiliser imports, which increased in value terms by nearly 72 per
cent, year-on-year and amounted to around US dollars 77 million and
imports of petroleum, which increased marginally by 0.8 per cent,
year-on-year, meanwhile, negated to some extent the decline in
expenditure on imports as a result of lower expenditure on the
aforementioned items. Expenditure on imports of investment goods which
declined in the previous two months reversed in August and grew by 9.9
per cent, with expenditure on machinery and equipment growing by 25.3
per cent.
On a month-on-month basis, expenditure on imports has recorded an
increase from July to August. In US dollar terms, imports increased from
US dollars 1,325 million in July 2012 to US dollars 1,750 million in
August 2012. Increased expenditure on imports in August was largely due
to the increased expenditure on petroleum products, particularly refined
petroleum, in view of the closure of the refinery in July for periodic
maintenance purposes. A significant increase in import expenditure on
machinery also contributed to the increased expenditure on imports in
August 2012.
The decline in export earnings in August 2012 was driven by exports
of both industrial goods and agricultural goods. The decline in earnings
from exports of garments, which account for about 40 per cent of total
exports; food, beverages and tobacco; and printing industry products
mainly accounted for the decline in earnings from industrial exports.
The decline in export earnings from tea, rubber and coconuts and coconut
based products largely accounted for the decline in earnings from
agricultural goods exports.
With regard to the services account and current transfers in the
Balance of Payments (BOP), increased earnings from tourism and workers'
remittances continued to cushion the current account of the BOP.
Earnings from tourism in August 2012 grew by 16.4 per cent,
year-on-year, to US dollars 82 million, while during the first eight
months of 2012, earnings from tourism have grown at a rate of 23.0 per
cent, year-on-year, to US dollars 642 million.
The number of tourists visiting Sri Lanka totalled 79,456 in August
2012, an increase of 9.7 per cent, raising tourist arrivals during the
first eight months of 2012 to 622,661. |
