Exports decline...

However, cinnamon, nutmeg and mace showed a considerable growth on a YOY basis, the Central Bank added. The seafood exports in July dropped by 5.8 percent YOY to US $ 14.2 million but the statement said such exports to the European Union (EU) had risen by 19.9 percent YOY as the ban on fish exports to the EU was removed in end-june.

Meanwhile, the earnings from the textile and garment exports – the largest commodity export – which accounts for 48 percent of the total export basket, rose by 3.0 percent YOY to US $ 425.6 million, while the seven-month exports rose by 4.3 percent YOY to US $ 2.9 billion. The continuation of the trend could bring the cumulative earnings from textiles above the US $ 5 billion mark by year end.

The Central Bank attributed this growth to higher garment exports to the EU and nontraditional markets such as Canada, China, Australia and the UAE. The impact of Brexit is yet to be seen as a larger share of Lankan garments is sold to Britain. The earnings from petroleum products decreased by 24.7 percent YOY in July, owing to the combined effect of lower bunkering quantities and average bunkering prices.

Meanwhile, the imports declined largely due to the significant decline in expenditure on vehicles – both consumption and investment related. The consumption vehicle imports declined by 63.7 percent YOY to US $ 53.6 million in July, while during the seven months, the country has spent US $ 472.9 million on vehicles, a 36.5 percent decrease from a year ago. The transport equipment categorized under investment goods also saw a decline of 29.4 percent YOY to US $ 57 million, while the decline for the first seven months was 41.6 percent YOY to US $ 348 million.

“Importation of motor cars, hybrid electric vehicles, motorcycles, buses, agricultural tractors and auto-trishaws declined significantly during the month,” the Central Bank said. The import expenditure was further supported by the lower fuel imports, which dropped by 18.6 percent YOY to US $ 142 million in July. During the first seven months, the country spent US $ 1.3 billion on fuel, a decrease of 20 percent from the same period a year ago. Meanwhile, the wheat and maize imports declined sharply by 67 percent YOY in July to US $ 8.3 million mainly due to the reduction in volumes and prices of wheat.

However, the imports of machinery and equipment and building materials rose in July by 25.4 percent and 14.4 percent, respectively due to the pick up in construction activities in the country. Meanwhile, increasing imports of gold during the month has also been observed due to the high quantum of gold imported and the non-importation of gold during the corresponding month in 2015. Open trade and non-aligned foreign exchange policy has been key economic pillars of the coalition regime, which came into power last year, but the exports have gone downhill since then and the external sector has remained extremely fragile ever since. The country concluded the World Export Development Forum last week, which drew many international figures from across the world, but according to reports, less policy matters on trade, particularly on reviving exports, had come out.