Trade deficit falls sharply – CB
View(s):Policies adopted by the Central Bank (CB) and the government earlier in the year have helped contain the deficit in the trade balance of the balance of payments substantially in June and across the second quarter of 2012, the CB said in a media statement. “The deficit in the trade balance, which was $ 848 million in June 2011 and $942 million in December 2011, was substantially lower in June 2012, amounting to $663 million. This is the lowest level recorded by the trade balance since February 2011,” it said.
Expenditure on imports, which had decreased on a year-on-year basis since April 2012, recorded a further decline of 15 per cent, year-on-year, in June 2012, as expenditure on several categories of imports, which had contributed significantly to the expansion of the trade deficit last year, declined. As in the previous month, expenditure on imports of motor vehicles and gold contracted in June too, the CB said.
Expenditure on imports of motor vehicles and gold declined, by 58.9 per cent and 71.1 per cent, respectively. A reduction was also noted in respect of import expenditure on wheat and rubber based products, within intermediate goods. On exports, the CB said as in the case of many other Asian countries including India and Thailand, Sri Lanka’s export earnings also slowed down in recent months.
The marked decline in the prices of commodities such as cotton and rubber in international markets has been a significant factor contributing to the decrease in Sri Lanka’s export earnings in recent months. “Meanwhile, in the face of dampening global demand along with faltering economic activity, particularly in the European region, lower demand for certain products such as rubber-based products, has adversely impacted on some exports, by June. Nevertheless, exports of apparel, which have the largest share in exports, have sustained demand in major markets and are therefore expected to remain firm in volume terms,” it said.
Earnings from tourism in June 2012 grew by 20.6 per cent, year-on-year, to $63 million, while during the first six months of 2012, earnings from tourism have grown at a robust rate of 24.3 per cent, year-on-year, to $460 million.Workers’ remittances grew by 12.1 per cent, year-on-year, to $452 million in June 2012, while cumulative inflows on account of workers’ remittances during the first six months of 2012 increased by 17.4 per cent to $2,942 million.
Accordingly, net current transfers have continued to help buttress the current account of the balance of payments.
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