Monday 23 June, 2014 – Daily FT
A higher growth in exports and a dip in imports in April saw trade deficit contracting by a near 18% to $ 682 million.
The Central Bank said on Friday on a year-on-year basis, earnings from exports in April 2014 increased by 9.4% to $762 million, while expenditure on imports declined by 5.3% to $1,444 million.
“Accordingly, the trade deficit contracted by 17.7% to $682 million,” it added.
The cumulative trade deficit for the first four months of 2014 contracted by 12.1%, as the growth in export earnings of 16.9% outpaced the 2.6% increase in import expenditure.
The growth in earnings from exports was led by improved performance in industrial exports which grew by 8%, year-on-year, in April 2014 to $559 million. Industrial exports led by the earnings from export of textiles and garments, increased by 22.5%, contributing 94% to the total increase in exports. Industrial exports accounted for more than 73% of total exports.
During the month, earnings from export of garments to the EU and to the USA increased by 22.3% and 21.2%, respectively, while a notable increase of 50.5% was observed in export of garments to non-traditional markets such as China, Hong Kong, Japan and Russia reflecting further diversification of export markets.
Earnings from the export of machinery and mechanical appliances and leather products also contributed to the growth in exports of industrial products. Exports of machinery and mechanical appliances, comprising of electrical and electronic equipment such as transformers, static converters, accumulators and home appliances, increased by 20.7% while exports of leather products increased by 86.6% owing to a more than two fold increase in footwear exports. On the other hand, the export of petroleum products, gems, diamonds and jewellery, transport equipment declined in April 2014.
Healthy performance in tea and coconut product exports mainly contributed to the growth in agricultural exports by 13.7% to $200 million. Export earnings from tea increased by 9.8% to $117 million as a result of the increase in both the price and volume of tea exported. The average export price of tea increased by 2.8%, to $5.01 per kg in April 2014 from $4.87 per kg in April 2013, while export volumes increased by 6.8%, year-on-year.
Earnings from coconut product exports increased by 66.1% to $24 million, due to improved performance in both kernel and non-kernel coconut products in terms of both price and volume. Export earnings from minor agricultural products and vegetables also increased significantly by 106.3% and 134.3%, respectively, in April 2014.
However, earnings from export of spices declined by 37.3%, mainly due to the decline in export of pepper, cinnamon and cloves, owing to unavailability of stocks during the non-harvesting period. Further, earnings from rubber exports declined by 17.5%, year-on-year, in April 2014, due to significant declines in both export volumes and prices.
Expenditure on imports declined in April 2014 driven by reductions in both consumer and investment goods. Expenditure on consumer goods imports declined by 3.2% in April 2014, reflecting a decline in expenditure on most of food categories. With respect to food imports, import expenditure on sugar and confectionery and vegetables declined significantly.
Import expenditure on sugar and confectionery declined by 52.2% mainly due to significant decline in sugar prices in the international market owing to large global supplies. Meanwhile, import expenditure on vegetables declined by 12.6% due to lower imports of onions and leguminous vegetables. However, expenditure on cereals and milling industry products and dairy products increased in April 2014 due to significant domestic demand.
Imports of non-food consumer goods, increased by 6.3%, mainly due to the significant increase in clothing and accessories imports by 72.7% to $22 million. Further, expenditure on personal motor vehicle imports increased by 15.8% in April 2014 to $48 million. Expenditure on telecommunication devices and rubber products also increased. However, home appliances, household and furniture items and medical and pharmaceuticals declined in April 2014.
Expenditure on imports of investment goods declined by 20.4%, to $289 million in April 2014, mainly due to the decline in all major categories in investment goods. Expenditure on machinery and equipment imports declined by 17.7%, due to the decline in import of textile industry machinery, electric motors and generating sets and office machines.
Transport equipment declined by 42.1% due to a reduction in import of almost all sub categories except buses and Auto-trishaws in April 2014. Import expenditure on building materials declined by 13.6% due to lower imports of insulated wires and cables, cement and aluminium articles.
Despite the decline in import expenditure on consumer and investment goods, import of intermediate goods increased marginally by 0.2%, year-on-year, to $889 million in April 2014. The increase in intermediate goods imports in April 2014 was driven by an increase in textiles and textile articles. Expenditure on wheat and maize, fertilizer and paper and paperboard also contributed to this increase.
Although refined petroleum imports increased by 2.4%, expenditure on fuel imports declined by 8.8% in April 2014 due to the decline in import of crude oil. The average crude oil import price declined to $110.25 per barrel in April 2014 from $111.17 per barrel in April 2013.
Imports of textile and textile articles, grew by 16.6%, year-on-year, reflecting higher potential of earnings from export of apparel products in the coming months. However, import of diamonds and precious stones, vehicle and machinery parts and food preparations declined in April 2014.
| Tourism earnings top $ 700 m by AprilEarnings from tourism have topped the $ 700 million mark within the first four months of this year.
The Central Bank said tourist earnings are estimated to have increased by 29.2% to $130.1 million in May 2014, compared to $100.7 million in May 2013. In the first four months the amount was $ 771.7 million, up by 37% over the corresponding period of last year.
Tourist arrivals in May 2014 increased by 20.3% to 90,046 from 74,838 recorded in May 2013, resulting in a 26.5% cumulative growth in tourist arrivals up to May 2014.
Based on country of residence, India, UK, Germany, China, France and Russia account for over 50% of total tourist arrivals.
“With the end of the peak tourist season from November to April, tourist arrivals are expected to be lower from May onwards, albeit remaining above the levels recorded in the corresponding period of the previous year,” the Central Bank said.