July 14, Colombo: Sri Lanka's external sector strengthened further and trade deficit narrowed for the eighth consecutive month in May 2014 by 47.9 percent to US$ 393 million as earnings from exports substantially increased while expenditure on imports declined during the month, the Central Bank said Monday releasing the External Sector Performance review.
Earnings from exports in May 2014 increased significantly on a year-on-year (YoY) basis by 11.1 percent to US$ 882 million, while expenditure on imports declined by 17.6 percent to US$ 1.275 billion.
The cumulative trade deficit for the first five months of 2014 contracted by 19.3 percent, as a result of a 15.7 percent growth in export earnings and a 1.5 percent decline in import expenditure, the Central Bank said.
The largest contribution to the overall growth came from industrial exports followed by agricultural exports.
Earnings from industrial exports grew by 7.7 percent to US$ 639 million reflecting positive performance in almost all sub categories.
Textiles and garment exports grew by 14.5 percent to US$ 365 million in May 2014 compared to same period last year.
Earnings from agricultural exports increased 21.2 percent in May to US$ 239.9 million, out of which tea exports increased by 9.7 percent amounting to US$ 140.6 million.
Expenses on fuel imports decreased significantly by 35.4 percent YOY to US$ 208.9 million. However, expenses on Food and Beverages increased 8.4 percent to US$ 137.6 million in May compared to the same month in 2013.
During the month Workers' Remittances grew by 8.8 percent to US$ 557.5 million and earnings from tourism increased 29.2 percent to US$ 130.1 million. For the first five months of the year tourism sector earned US$ 901.8 million increasing 35.8 percent from the same period in last year.
By the end of May 2014, Sri Lanka's gross official reserves amounted to US$ 8.8 billion, while total international reserves, which include foreign assets of commercial banks, amounted to US$ 10.2 billion.
The domestic foreign exchange market has remained relatively stable during the year so far up to 11 July 2014, with the rupee marginally appreciating by 0.40 percent against the US dollar, the Central Bank said.