September trade gap narrows significantly
Sri Lanka’s September trade gap narrowed as significantly as 43.3 percent yearon-year (YoY) to US$ 513.1 million, while the cumulative trade gap for the period from January to September narrowed 0.3 percent to US$ 6.7 billion.
According to the Central Bank, this is the first time since December 2009 that the cumulative trade deficit for the year has declined.
“The multi-pronged policy strategy implemented during the first half of 2012 to curb the widening trade deficit has therefore helped reduce the deficit in the current account,” the Central Bank said.
However, exports during the month of September contracted 6.6 percent YoY to US$ 801.5 million, while expenditure on imports also fell 25.4 percent YoY to US$ 1.3 billion.
The Central Bank nevertheless said the declining trend in earnings from exports decelerated sharply in September 2012, as tea exports fared well after declining for three consecutive months.
Tea exports during the month of September rose 16.2 percent YoY to US$ 141.1 million.
The export earnings from industrial products, which include textile and garments, rubber products and food and beverages and tobacco fell 11.6 percent to US$ 567.1 million, with both earnings from textile and garments and rubber products contracting.
Expenditure on imports meanwhile, continued to respond to the tighter policy environment and recorded a sharp decline amidst sharp declines on expenditure on food and beverages, consumer goods and transport equipment.
“The lower import expenditure during September 2012 reflected developments in respect of both external and domestic economic conditions. While expenditure on imports of most consumer goods declined, import expenditure on non-food consumer items declined responding to the depreciation of the rupee since February this year, as well as the tightening of credit conditions over the past several months,” the Central Bank said.
Expenditure on intermediate goods imports declined in September 2012, driven by non-oil imports. Expenditure on wheat imports however, increased as world wheat prices have increased due to drought conditions impacting on major wheat producing countries.