Trade deficit declines on stronger exports

  • Apparel leads the way with 25% growth, expectations to meet $ 5b target well before 2015
  • Exports in June 2014 grew by 22% to $ 986 million, imports declined by 4.6%
  • Industrial exports led at 64% followed by agricultural exports at 36%

 

Sri Lanka’s trade deficit contracted by 20.1% in June, as a result of a strong 16.8% growth in export earnings, propped up by strong performance from apparel and a 1.2% decline in import expenditure during the first half of 2014, the Central Bank said yesterday.

 

On a year-on-year basis, earnings from exports in June 2014 grew by 22% to $ 986 million, while expenditure on imports declined by 4.6% to $ 1,439 million. Accordingly, the trade deficit contracted for the ninth consecutive month in June 2014, by 35.3% to $ 454 million.

 

Expansion in all major export categories contributed to the growth in exports in June2014. Industrial exports, which were the major contributor to export earnings at 64%, led the growth in overall exports, followed by agricultural exports at 36%.

 

Earnings from industrial exports grew by 18.7%, year-on-year, to $ 725 million in June 2014, mainly due to favorable performance in major export categories such as textiles and garments, rubber products and leather products.

 

Textiles and garment exports which account for 45.3% of total exports grew by 25%, year-on-year, to $ 446 million in June 2014 contributing more than 50% to the overall growth in exports in June 2014. The significant increase in exports to both traditional markets such as the European Union (EU) which grew by 34.6% and USA which grew by 12.1% and non traditional markets which grew by 44.5% contributed to this growth.

 

“The rapid growth in the apparel industry indicates the ability of the industry to achieve the target for exports of $ 5 billion well before 2016. Strategies such as backward integration and promotion of new Sri Lankan brands in the international market have helped the industry to grow rapidly,” the Central Bank observed in the statement.