Sri Lanka’s agricultural exports in the month of April 2016, has declined by a sharp 12.4 per cent year-on-year, led by tea and spices, weighing down on the overall export performance in April 2016, the Central Bank of Sri Lanka said last week. Releasing the External Sector Performance Review for the month of April, the Central Bank said earnings from exports in April however, recorded a marginal decline of 0.9 per cent to US$ 707 million, year-on-year while exports earnings during the first four months of 2016 contracted by 4.5 per cent, year-on-year, to US$ 3,435 million.
Consequently, the trade deficit in April 2016 narrowed by 2.9 per cent, on a year-on-year basis to US$ 754 million from the deficit of US$ 777 million in April 2015 due to the steeper reduction in imports in comparison to the decline in exports.
Further, on a cumulative basis, the trade deficit during the first four months of 2016 contracted by 2.4 per cent to US$ 2,621 million from US$ 2,685 million recorded during the same period of 2015.
The summary of the External Sector Performance announcement by the Central Bank follows;
Earnings from exports in April 2016 stood at US dollars 707 million, indicating a marginal decline of 0.9 per cent, year-on-year, attributable to lower agricultural exports, despite higher earnings from industrial exports.
Earnings from industrial exports, which account for 77 per cent of total exports, increased by 3.1 per cent compared to April 2015, mainly due to the improved performance of textiles and garments exports.
Earnings from textiles and garments exports increased by 3.1 per cent, year-on-year, to US dollars 340 million during the month, reflecting increases in garment exports to EU and USA markets by 3.7 per cent and 3.1 per cent, respectively. Further, export earnings from food, beverages and tobacco, base metals and articles, and leather, travel goods and footwear, catogorised under industrial products, also increased significantly in April 2016.
The decline in tea exports is attributed to the lower export volumes and prices compared to April 2015 amidst subdued global demand and higher supply of black tea from other countries.
Continuing the declining trend observed from the latter part of 2015, export earnings from spices decreased significantly by 30.0 per cent in April 2016, year-on-year, reflecting poor performance of cloves and pepper exports. Further, export earnings from minor agricultural products and seafood also declined by 32.8 per cent and 18.6 per cent, respectively, during the month.
The leading markets for merchandise exports of Sri Lanka during the first four months of 2016 were the USA, the UK, India, Germany and Italy accounting for about 54 per cent of the total exports.
The expenditure on imports decreased by 2.0 per cent to US dollars 1,461 million, in April 2016 compared to the same month in 2015, due to the decline recorded in expenditure on consumer goods, particularly vehicles and rice imports. Reflecting the impact of the policy measures adopted by the government to curtail vehicle imports, expenditure on personal motor vehicle imports decreased by 28.8 per cent, year-on-year, in April 2016.
Expenditure on rice imports declined for the 12th consecutive month to US dollars 1.2 million in April 2016 reflecting a 94.7 per cent decrease, year-on-year, due to the availability of rice in the local market from the bumper paddy harvest in 2015 and the impact of the increases in the import duty by the government on the import of rice. Further, the lower expenses incurred on transport equipment, base metals, fertilizer, vegetables and fuel imports contributed largely to the decline the import expenditure during the month.
However, import expenditure on wheat and maize increased considerably in April 2016 due to importation of wheat by Prima Ceylon (Pvt.) Ltd, the main wheat importer in Sri Lanka, after a lapse of three months.
Meanwhile, import expenditure on machinery and equipment and building materials increased by 12.2 per cent and 22.3 per cent, respectively on a year-on-year basis in April 2016. Further, import expenditure on textile and textile articles, and diamonds and precious stones and metals increased during the month.
On a cumulative basis, expenditure on imports during the period from January to April 2016 decreased by 3.6 per cent to US dollars 6,055 million, mainly due to the declines recorded in in the importation of fuel, transport equipment and rice. During the first four months of 2016, China, India, Japan, Singapore and the UAE accounted for about 57 per cent of the total imports.