Sri Lanka's external sector remained stable during 2014

November 26, 2024

Development - Provincial

Sri Lanka's external sector remained stable during 2014 - CBSL

February 26, 2015

Sri Lanka’s external sector remained stable during 2014 with continuous inflows being recorded in the Balance of Payments (BOP), the Central Bank data released in its External Sector Performance for December 2014 revealed on Wednesday (25). Foreign exchange inflows to the country in terms of exports, tourist earnings, workers’ remittances, foreign direct investments (FDI) and other inflows to the financial account recorded a noteworthy growth during the year. Although the increase in imports towards the end of the year exerted some pressure on the current account, the overall balance of the BOP recorded a surplus of US dollars 1.4 billion during 2014.

Earnings from exports amounted to US dollars 1,010 million in December 2014 registering a 2.2 per cent growth year-on-year, reflecting increases in all major categories. The largest contribution came from industrial exports, supported by a substantial increase in transport equipment, which included an export of a cruise ship. Export of gems, diamond and jewellery, leather, travel goods and foot wear, machinery and mechanical appliances, food, beverages and tobacco also contributed significantly for the growth in industrial exports.

However, earnings from textiles and garments exports which accounted for about 45 per cent of total exports recorded a marginal decline of 0.6 per cent in December 2014 against the high export base recorded in December 2013. Such decline is resulted by the drop of garment exports to the EU by 13.8 per cent despite the increase of exports to the USA by 11.5 per cent.

Meanwhile, earnings from tea exports recorded a decline of 5.8 per cent in value term due to lower prices in spite of a volume increase by 2.6 per cent. Further, earnings from sea food exports continued to decline in December. However, earnings from coconut products increased by 31.6 per cent mainly due to significant increase in export of coconut kernel products while minor agricultural products also increased significantly compared to the corresponding month of 2013.

Expenditure on imports increased by 15.9 per cent, year-on-year, to US dollars 1,797 million in December 2014, led by imports of investment goods and consumer goods.

On a cumulative basis, earnings from exports during 2014 grew by 7.0 per cent to US dollars 11,118 million, while expenditure on imports amounted to US dollars 19,417 million registering 7.9 per cent growth. The leading markets for merchandise exports of Sri Lanka during 2014 continued to be the USA, UK, India, Italy and Germany accounting for about 50 per cent of total exports, while the main import origins continued to be India, China, UAE, Singapore and Japan accounting for about 59 per cent of total imports.

The trade deficit in December 2014 widened to US dollars 788 million in comparison to US dollars 563 million in December 2013. Accordingly, the trade deficit during 2014 widened by 9.1 per cent to US dollars 8,299 million over 2013.