Sri Lanka’s trade deficit declines in first two months of 2011

Apr 28, Colombo: Sri Lanka’s cumulative trade deficit in the first two months of 2011 declined by 1.2 percent compared to the corresponding period of 2010, due to higher export earnings, the Central Bank said today.

Releasing figures on external sector performance for February 2011, the Economic Research Department of the Central Bank reported that the year-on-year, earnings from exports grew by 51.9 percent and expenditure on imports rose by 25.2 percent.

However, the trade deficit for the month of February 2011 expanded by 9.1 percent, year-on-year, to USD 376 million while the deficit for 2011 declined from USD 1.11 billion to 1.097 billion.

Increased trade from exports of textiles and garments, petroleum and rubber products bolstered the earnings from exports in February 2011 by 36.8 percent compared to previous year, to USD 860 million.

At the same time, expenditure on imports increased by 27.0 percent to USD 1.236 billion in February 2011, mainly due to increases in imports of motor vehicles, petroleum, textiles and garments, and machinery and equipment, the Central Bank reported.

Garment exports to EU and USA had risen significantly contributing 54.8 percent and 35.1 percent, respectively to the export earnings from the industrial sector.

Earnings from agricultural exports grew in February 2011, mainly due to the higher prices that prevailed in the international market, the Bank reported.

The average export prices of tea and rubber remained high at USD 4.68 per kg and US dollars 5.35 per kg, respectively.

According to the Central Bank gross official reserves continued to remain above the targeted level and stood at USD 7.0 billion by end March 2011 without Asian Clearing Union (ACU) balances, sufficient for 5.8 months of imports.

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