Sri Lanka sees persistent weakening of its export capacity
View(s):Sri Lanka has been witnessing a persistent widening of the trade deficit, weakening of its export capacity along with growth in tourism earnings and moderate workers remittances last year, according to a Central Bank (CB) report. Earnings from exports during 2015 decreased by 5.6 per cent to US$ 10.5 billion while expenditure on imports declined by 2.5 per cent to $18.93 billion. Lower performance in tea, rubber products, textile and garments and seafood exports contributed mainly for the drop in exports. Significant decline recorded in fuel import bill due to lower oil prices and lower thermal power generation caused for the decline in import expenditure.
The leading markets for merchandise exports of Sri Lanka during 2015 continued to be the USA, UK, India, Germany and Italy accounting for about 51 per cent of total exports. Outlining the country’s external sector performance, the CB said in a media statement that earnings from exports continued its downward trend for the 10th consecutive month in December 2015 recording an 18.7 per cent decline, year-on-year, to $817 million, led by textile and garments and tea exports. However the Bank noted that there was a mixed performance in the month of December 2015 with a widened trade deficit, continued high growth in tourist earnings and moderate workers’ remittances.
Export earnings from textile and garments, which contribute nearly 48 per cent to the total exports, declined for the third consecutive month by 12.8 per cent in December 2015, reflecting low exports to both EU and USA markets. Accordingly, earnings from tea exports in December dropped by 24.7 per cent reflecting declines in both export volume and average price levels compared to the corresponding month in the previous year. Expenditure on imports weakened for the sixth consecutive month in December 2015 by 8.5 per cent to $1,645 million, year-on-year. A large part of this decline in growth was attributable to the drop in imports of intermediate goods led by fuel imports, while the drop in imports of consumer goods and investment goods also contributed. Expenditure on imports has come down for the sixth consecutive month in December 2015 by 8.5 per cent to $1,645 million, year-on-year.