Sri Lanka’s trade deficit widens as exports continue to falter

„November trade deficit widens 47% to US $ 922mn „Trade deficit in 11 months widens 7.5% to US $ 8.13bn „November export earnings fall 3.4% to US $ 809.7mn „Import expenditure up 18.2% to US$ 1.73bn „Expenditure on vehicle imports up to November falls

Sri Lanka’s trade deficit for November 2016 widened 47.2 percent Year-onyear (YOY) to US$ 922.4 million due to higher imports expenditure amid a decline in exports, the data released by the country’s Central Bank showed.

Total exports for November fell 3.4 percent YOY to US$ 809.7 million. Industrial exports, which account for around 77 percent of total exports, fell 2 percent YOY to US$ 624 million.

Textiles and garments, which contribute towards around a half of Sri Lanka’s export earnings, declined 6.6 percent YOY to US$ 383 million, as both traditional markets, where

clients are facing challenges, and the nontraditional markets to which producers are diversifying to in reply, took in lower exports.

Earnings from rubber product exports grew 9.3 percent YOY to US$ 61.2 million, while earnings from petroleum sales increased 37.5 percent YOY to US$ 24.5 million due to higher demand for bunker and jet fuel which had pushed up sales volumes and prices.

The government intends to capitalize on bunkering and jet fuel sales, pushing for investments in both areas.

Meanwhile, gems, diamonds and

jewellery product export receipts fell 47.1 percent YOY to US$ 18.1 million. Printing industry exports increased twenty fold to U$ 11.6 million due to export of currency notes.

Exports from the agriculture sector fell 8.3 percent YOY to US$ 182.9 million, during a year in which weather anomalies led to substantial supply disruption.

The only major agricultural products to record growth were seafood and coconut, with export income of the former increasing 18.2 percent YOY to US$ 15.8 million due to lifting of the European fishing ban, while earnings of the latter increased 24.1 percent YOY to US$ 28.9 million.

Earnings from tea, the largest agricultural export crop, fell 6.6 percent YOY to US$ 101.3 million despite record prices at the Colombo Tea Auction, due to lower volumes. Spice export receipts fell 25.4 percent YOY to US$ 22.4 million.

Meanwhile, import expenditure increased 18.2 percent YOY to US$ 1.73 billion. Consumer goods expenditure declined 0.8 percent YOY to US$ 387.9 million, with vehicle imports contributing to the decline with a 45.6 percent fall YOY to US$ 64 million due to tax increases and financing limitations imposed.

Food and beverage spending increased 10.6 percent YOY to US$ 141.1 million ahead of the festive season.

Import of intermediate goods increased 27.8 percent YOY to US$ 882.9 million. Textile and textile article imports increased 54.1 percent YOY to US$ 258.3 million.

The fuel bill, traditionally the highest import share, increased 14.6 percent YOY to US$ 221.9 million mainly through coal imports which increased 166.3 percent YOY to US$ 44.9 million due to increased dependence on the country’s breakdownprone coal power plant during the drought.

Sri Lanka’s exposure to hydro power is currently curtailed due to the ongoing drought, which usually generates over a third of the country’s electricity.

Imports of diamonds and precious stones and metals increased 480.2 percent YOY to US$ 28.2 million due to gold purchases, while base metal imports increased 74.9 percent YOY to US$ 69.4 million.

Investment goods imports increased 20.4 percent YOY to US$ 460 million, with machinery and equipment imports increasing 25 percent YOY to US$ 243.9 million, mainly through increases in machinery and machine parts of engineering, electronic, medical and laboratory equipment.

Building material imports increased 12.7 percent YOY to US$ 149.5 million, with most material except for cement recording increases, while transport equipment spending increased 22.5 percent YOY to US$ 66.2 million.

For the 11 months up to November in 2016, the trade deficit widened 7.5 percent YOY to US$ 8.13 billion.

Total exports fell 2.8 percent YOY to US$ 9.45 billion, with textile and garment exports increasing 1.4 percent YOY to US$ 4.49 billion. Rubber product exports increased 0.4 percent YOY to US$ 705.5 million, while tea exports fell 6.2 percent YOY to US$ 1.16 billion.

Import expenditure for the same period increased 1.7 percent YOY to US$ 17.58 billion. Consumer goods spending fell 8.4 percent YOY to US$ 3.96 billion due to vehicle imports declining by 43.1 percent YOY to US$ 736.4 million, while food and beverage spending increased 0.4 percent YOY to US$ 1.48 billion.

Intermediate goods imports increased one percent YOY to US$ 8.87 billion, with textile and textile article imports rising 20.5 percent YOY to US$ 2.48 billion.

Oil bill for the 11 months fell 13.3 percent YOY to US$ 2.15 billion due to lower crude and petroleum imports. Gold purchases pushed the diamonds and precious stones and metals segment up 199 percent YOY to US$ 440.6 million.

Investment goods imports for the 11 months increased 13.9 percent YOY to US$ 4.74 billion.