From Daily FT
The country’s exports sector continue to struggle, with May
data showing an overall marginal decline though apparels have outperformed as
soaring imports further widened the trade deficit.
In April, exports slumped to their lowest level in two years and in May, the
performance couldn’t turn positive as the sector ended with a 0.1% decline.
This was despite the apparel sector reporting an encouraging 7.5% growth.
Some viewed the flat growth in May as an encouragement especially after the dip
in April.
On a cumulative basis, export earnings during the first five months of 2015
increased marginally by 0.2%, year-on-year, to $ 4.47 billion.
Whilst exports struggled, imports continue to soar, recording a 17.2%,
year-on-year, to $1.58 billion in May led by vehicle imports.
Consequently the deficit in the trade account in May 2015 widened substantially
by 49.7% to $703 million in comparison to $470 million in May 2014, which the
Central Bank said was the lowest monthly value recorded during the year
2014.
On a cumulative basis, trade deficit during the first five months of 2015
increased by 10.2% to $3.4 billion.
Releasing external trade data, the Central Bank said yesterday earnings from
exports further moderated in May 2015 to $883 million, recording a marginal
decline of 0.1%, year-on-year.
Despite the significant improvement recorded in exports of textile and
garments, lower performance in tea, sea food and gem, diamond and jewellery
exports contributed to this decline.
Tea exports, which were severely affected by the lower demand from Russia and
the Middle East, declined for the eight consecutive month in May 2015,
recording a drop of 12.1% compared to the corresponding month of 2014. Tea
exports to Russia and the Middle East declined by 19.2% and 9.7%, respectively,
during May 2015 compared to the corresponding month of 2014.
Seafood exports which dropped continuously from October 2014, recorded a
further decline of 39.3% in May 2015, compared to the corresponding month in
2014. This reduction was mainly due to the significant decline of 74.8% in sea
food exports to the EU market, the main seafood market of Sri Lanka as a result
of the ban on seafood imports from Sri Lanka to the EU market with effect from
13 January 2015.
Export earnings from gems, diamonds and jewellery declined by 29.8%
year-on-year to $25 million. Petroleum products and, machinery and mechanical
appliances also contributed for the drop in exports during the month.
Export earnings from textiles and garments, which account for about 45% of
total exports and declined in March and April 2015, increased by 7.6% during
May 2015, reflecting an increase in exports to the USA and non-traditional
markets such as Canada, China, UAE and Australia. However, textiles and
garments exports to the EU market declined by 11.8% in May 2015, continuing the
declining trend observed from March 2015.
On a cumulative basis, export earnings during the first five months of 2015
increased marginally by 0.2%, year-on-year, to $4,471 million. The leading
markets for merchandise exports of Sri Lanka during the first five months of
2015 were the USA, UK, India, Germany and China accounting for about 51% of the
total exports.
Total import expenditure in May 2015 increased for the second consecutive month
recording a significant increase of 17.2%, year-on-year, to $1,585 million led
by vehicle imports, which include personal motor vehicles categorised under
consumer goods and commercial vehicles categorised under investment goods.
Imports of motor vehicles for personal use, increased by 87.1%, year-on-year,
to $93 million, while transport equipment increased by 117.2%, year-on-year, to
$72 million mainly due to the increase in importation of auto trishaws.
In addition, import of machinery and equipment, and textiles and textile
articles also contributed significantly to the growth in imports. Import
expenditure on machinery and equipment increased by 21.8% during the month,
mainly due to higher imports of machinery and equipment parts, printing
machinery and medical and laboratory equipment.
Import expenditure on textiles and textile articles increased by 16.3%,
year-on-year, mainly due to the increase in fabrics such as knitted or
crocheted fabric, woven fabric of cotton and tyre cord fabric. Meanwhile,
import expenditure on fuel declined by 7.8%, year-on-year to $264 million in
May 2015, reflecting 14.1% reduction in refined petroleum bill as a result of a
30.1% decline in import prices. However, expenditure on crude oil imports
increased by 11% due to a substantial increase in import volume, despite the
decline in the import price.
Meanwhile, import expenditure on fertiliser and dairy products declined by
20.9% and 40.7%, respectively, while rice imports which recorded a significant
growth since April 2014, also declined by 23.8% in May due to the increase of
Special Commodity Levy imposed on rice to Rs. 40 per kg from Rs. 20 per kg with
effect from 26.03.2015.
On a cumulative basis, expenditure on imports during the first five months of
2015 increased by 4.3%, year-on-year, to $7,868 million mainly led by consumer
goods imports followed by investment goods imports. During the period from
January to May 2015, the main import origins were India, China, Japan, UAE and
Singapore accounting for about 60% of the total imports.
EU fish ban bites $ 75 m income for Sri Lanka: Govt.
Sri Lanka has suffered a revenue loss of $ 75 million (68
million euros) because of a European Union ban on fish caught by Sri
Lanka-flagged vessels since January, a government spokesman said on Wednesday.
Sri Lanka was a significant exporter of swordfish and tuna to countries in the
EU, which blacklisted Sri Lanka in January for failing to combat illegal
fishing.
Brussels accuses Sri Lanka of allowing vessels to fish the Indian Ocean without
marine satellite positioning equipment, making it virtually impossible to
monitor their movements.
On Wednesday, Sri Lanka Foreign Ministry spokeswoman Mahishini Colonne said the
Government had been taking steps to address the issues raised by the EU.
Among them are fitting vessel monitoring systems on high sea fishing vessels,
maintaining and updating a register of high sea fishing licenses, banning
vessels using harmful fishing methods and prosecuting those found to be fishing
illegally.
Colonne said a technical evaluation mission from the Office of the Director
General of Maritime Affairs and Fisheries in Brussels is expected to visit Sri
Lanka in October and discuss further steps toward lifting the ban.
The EU warned Sri Lanka about breaking international rules on illegal fishing
in November 2012. The bloc said it only accepts stocks caught at sustainable
levels and certified as legal by the exporting country.
Environmental groups have welcomed the trade restrictions, noting that the move
would also prohibit EU fishing vessels from working in Sri Lankan waters.
The EU slapped similar restrictions on Belize in March 2014 and removed them in
December after the Latin American country adopted new legislation to combat
illegal fishing and showed signs that it was respecting its international
obligations.
