Sri Lanka trade deficit expands in August 2010

Sri Lanka's cumulative trade deficit expanded over US$ 3.6 billion during the first eight months of 2010 due to increased expenditure on imports surpassing the earnings from exports, figures released Thursday by the Economic Research Department of Sri Lanka's Central Bank showed.

Cumulative earnings from exports during the first eight months of 2010 increased by 10.8 percent to US$ 5.04 billion compared to the corresponding period of 2009.

The expenditure on imports during the same period rose by 36.9 percent to US$ 8.67 billion creating a trade deficit of US$ 3.63 billion, the data showed.

During the month of August earnings from agriculture sector increased by 20.6 percent, mostly due to rise in exports of tea by 17.8 percent. Industrial sector showed a growth of 7.9 percent but the earnings from textiles and garments declined by 4.0 percent.

Nearly 40 percent of the cumulative expenditure was for import of petroleum while the imports of consumer goods also significantly contributed to the deficit.

During the first eight months of the year workers remittance has increased by 12.9 percent over that of the corresponding period of 2009, to US$ 2.48 billion.

Including the proceeds of the Sovereign Bond issued in September 2010, the gross official reserves increased to US$ 6.8 billion by 25 October 2010 sufficient for 6.4 months of imports, the Bank reported.