Import costs continued to outgrow export revenues, according to October 2011 data released by the Central Bank (CB).
The Bank said in a statement that - reflecting the high base of exports in October 2010 and contraction in exports of tea, rubber and minor agricultural crops -, earnings from exports declined by 4.9 % to US$882 million in October 2011. However, during the first 10 months of 2011, the cumulative earnings from exports increased by 23.4 % to $8,702 million compared with the same period of 2010. At the same time, expenditure on imports, driven by high growth in investment and intermediate goods, increased by 41.4 % to $1,751 million in October against the same month of 2010.
The cumulative expenditure on imports for the first 10 months of 2011 increased by 50.7 % to $16,436 million, compared with the corresponding period of 2010. As a result, the trade deficit for the first 10 months of 2011 stood at $7,734 million, a significant portion of which was on account of imports of infrastructure related projects of the government that have been funded mainly by foreign loans. In that context, the total inflows to the government, including the proceeds of the International Sovereign Bond issue, amounted to $3,507 million, during the first 10 months of 2011.
Industrial exports recorded a growth of 12.8 % in October compared to the same month in 2010. Earnings from agricultural exports, which accounted for 23 % of total exports, declined by 10.3 % mainly due to decline in tea export earnings by 12.1 %, year-on-year, in October. The growth in industrial exports was led by textile and garments, rubber based products, petroleum products, diamond and jewellery and food, beverages and tobacco. Textiles and garments exports grew by 12 %, year-on-year, in October, the Bank said.
Expenditure on imports was mainly driven by increases in intermediate and investment goods. The intermediate goods imports increased year-on-year by 42.7 % led by petroleum imports. The higher petroleum import expenditure was mainly due to the higher average import price of crude oil of $107.2 per barrel in October compared to $81 per barrel for the corresponding month of 2010. Fertiliser imports grew in terms of both prices and volumes, by 28.9 % and 72.6 %, year-on-year, respectively, and the sharp increase of volume was mainly due to expansion of fertiliser subsidy to cover all crops. Imports of investment goods increased by a substantial 58.7 % in October 2011, led by higher expenditure on imports of machinery and equipment, transport equipment and building materials. Expenditure on non-food imports increased by 12.7 % despite the decline in personal motor vehicle imports by 16.3 per cent, year-onyear, in October.
For the first 11 months of 2011, earnings from tourism grew at a healthy rate of 46.7 % to $736 million compared to the corresponding period of 2010.
The cumulative inflows on account of workers’ remittances grew at 24.3 % to $4,203 million for the first 10 months of 2011. “The expansion in exports of services and increased workers’ remittances helped contain the impact of the trade deficit, thereby mitigating the deficit of the current account to approximately $3,253 million for the first 10 months of 2011,” the Bank statement added.
Total external reserves, which includes gross official reserves and foreign assets of commercial banks, increased to $8,136 million by end October from $8,035 million by end 2010. |
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