Consumer electronics imports decline in 2012- Analysis

Growth in imports of consumer electronics and home appliances in terms of both volume and value slowed down over 2012, as compared with unprecedented high levels of imports in 2011, according to a statistical analysis by the Ceylon Chamber of Commerce (CCC).

The moderation in growth was largely a product of a sharp fall in the value of the rupee, coupled with increased costs of borrowing in 2012, where the reverse conditions, an overvalued exchange rate and low interest rates, had caused a dramatic spike in the importation of consumer electronics and household appliances in 2011.

Customs statistics on consumer electronics and home appliances are bundled together with a large variety of electrical machinery and equipment classified as investment goods under HS Chapters 84 and 85.

Notably, the value of imports under HS Chapter 84 grew by 19 percent in 2012, against a drastic 66 percent in the preceding year, further reflecting an increased demand for investment goods along with demand for durable consumer electronics.

Meanwhile, HS Chapter 85 imports of electrical machinery and equipment grew by 18 percent last year, against 57 percent in 2011. As a percentage of total imports, Chapter 84 accounted for 8.2 percent and Chapter 85 accounted for 6 percent in 2012.

The study noted that demand for consumer electronics had benefited significantly from the availability of cheaper goods as a result of a shift in production to low cost destinations such as India and China, with both countries increasing their market share in Sri Lanka over the last two years, alongside increasing income levels of Sri Lankans and the consequent changes in lifestyles.

China’s market share increased to 34 percent in 2012, against 25 percent in the previous year, whilst India, the second largest supplier, accounted for 11 percent of total imports. The study noted that former market leaders like Japan and Singapore have been steadily losing ground in Sri Lanka.

Whilst most products analysed in 2012 declined, a few exceptions to the rule were found in air conditioning machines, televisions and mobile phones, all of which recorded growth over the year.

Mobile phones imported increased by 282 percent to reach 3.4 million units in 2011 up from 0.8 million units imported in 2010. In 2012, the number imported increased further to reach 3.5 million units.

Sri Lanka is a country with high telephone density at 100.5 connections per 100 persons, according to the Central Bank statistics for 2011.