Sri Lanka’s trade deficit in the first 10 months of the year increased by 79.2% year on year (YoY). Cumulative exports earnings in the first 10 months of the year increased by 13.2% YoY to US$ 6,505 million, while cumulative import expenditure in the review period increased by 32.8% YoY to US$ 10,863 million.
As a result the trade deficit expanded to US$ 4,357 million during this period compared to US dollars 2,431 million in the corresponding period of 2009.
Meanwhile export earnings increased by 27.6% YoY to US$ 802 million in October 2010, the third highest monthly export value ever recorded, while import expenditure increased by 8.4% to US$ 1,131 million mainly due to substantial increases in non food consumer goods imports. Higher export earnings from textile and garments and minor agricultural crops helped the October increase.
The largest contribution to export growth in October was from the industrial sector, led by significant increases in textile and garments, rubber products and machinery and equipment earnings.
Garment exports to the EU and USA increased by 27.4% and 33.1% respectively in October. Damonds and jewellery export earnings declined by 10%, however earnings growth from all other industrial export sub categories exceeded 26% in October. Agricultural exports earnings which have taken on an increasing trend since April 2010, improved further in October, 2010 mainly reflecting higher prices. Average tea and rubber export prices continued to remain high at US$ 4.43 per kg. and US$ 3.81 per kg. respectively in October 2010. Minor agricultural export earnings increased by 35.9% to US$ 34 million in October, led by higher cinnamon and pepper earnings.
Consumer goods import expenditure rose in October due to higher non-food consumer goods imports led by motor vehicles. Food import expenditure also increased mainly due to higher sugar import prices and increased milk products import volumes.
However, wheat and rice imports expenditure declined in terms of both prices and volumes compared to October 2009. Intermediate goods imports expenditure decreased as both petroleum and fertilizer imports expenditure potential earnings from apparel products exports in the coming months. All sub categories of investment goods imports except transport equipment increased in October 2010.
During the first ten months of the year worker remittances increased by 21.9% to US$ 3,380 million YoY. Gross official reserves remained above the targeted level and stood at US$ 6.6 billion by end November 2010 without Asian Clearing Union (ACU) funds. Based on the previous 12 months average import expenditure of US$ 1,084 million per month, gross official reserves without ACU funds were equivalent to 6.1 months of imports. declined by more than 50% due to lower import volumes.
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