Export earnings grew by 10.7 per cent to US dollars 560 million in July 2005 outperforming the 2.5 per cent growth recorded in July 2004. Cumulative exports for the first seven months of 2005 recorded a growth of 11.4 per cent from US dollars 3,112 million in 2004 to US dollars 3,466 million in 2005.
Imports grew at a relatively lower rate of 8.5 per cent in July 2005 to reach US dollars 721 million in July 2005 from US dollars 664 million recorded in July 2004. Overall imports for the first seven months grew by 10.1 per cent to US dollars 4,838 million in 2005 from US dollars 4, 396 million in 2004.
The higher growth in exports was instrumental in limiting the trade deficit only to a marginal widening in July 2005. Thus the deficit increased only by 1.6 per cent to US dollars 161 million in July 2005. The trade deficit for the first seven month was US dollars 1,372 million compared with a deficit of US dollars 1,285 million in the comparable period in 2004. Despite this, the overall balance of payments position turned around from a deficit of US dollars 223 million to a surplus of US dollars 134 million by the end of July 2005, reflecting the benefits of private remittances, which grew by 23 per cent in the first seven months, official inflows to the government and the benefits from the debt relief. Consequently, official international reserves increased from US dollars 2,196 million in December 2004 to US dollars 2,213 million in July 2005.
Trade Performance in July 2005
The high export growth in July 2005 arose from high performance in agricultural and industrial exports. Agricultural exports, which contributed 18 per cent to total exports grew by 11.9 per cent. Industrial exports which accounted for 77 per cent of total exports grew by 7.3 per cent. Tea exports reached US dollars 70 million in 2005 recording a growth of 11.4 per cent. Coconut exports grew by 5.9 per cent. Other agricultural products increased by 22.4 per cent in 2005, supported by higher performance in all sub categories except not processed tobacco,. However, despite an increase in the rubber production in the second quarter of 2005, rubber exports declined by 8.7 per cent due to greater utilisation by domestic industries.
Industrial exports were led by higher exports of food and beverages, rubber products, chemical products, non metallic mineral products and petroleum products. Food, beverages and tobacco products, non metallic mineral products and petroleum products. Food, beverage and tobacco products showed a significant growth of 130 per cent as exports reached US dollars 30 million compared with US dollars 13 million in July 2004. Exports of rubber based products grew by 17.9 per cent to US dollars 27 million in July 2005 compared with US dollars 23 million in July 2004. However, exports of textiles and garments, which accounted for 47 per cent of overall exports, declined marginally by 2 per cent to US dollars 263 million in July 2005.
Expenditure on imports increased by 8.5 per cent due to higher imports of investment goods and intermediate goods, which increased by 25.2 per cent and 6.4 per cent, respectively in July 2005. Imports of consumer goods remained unchanged. Imports of intermediate goods increased by 6.4 per cent to US dollars 424 million compared with US dollars 398 million in July 2004.
Petroleum imports grew at 10.2 per cent to US dollars 103 million from US dollars 93 million in July 2004. Imports of textiles and clothing declined marginally by 3 per cent from US dollars 136 million in July 2004 to US dollars 132 million in July 2005.
Investment goods recorded a 25 per cent growth reaching US dollars 158 million compared to US dollars 126 million in July 2004. Both building materials and transport equipment increased nearly two fold. Building material imports reached US dollars 51 million, a rapid increasing from US dollars 24 million in July 2004. Transport equipment imports increased from US dollars 16 million in July 2004 to US dollars 31 million in July 2005.
Trade Performance in the First Seven Months of 2005
Exports grew at 11.4 per cent during the first seven months of 2005. The growth in agricultural exports was supported by higher performance in tea and other agricultural products, which offset the effects of a lackluster production in rubber and coconut in the first half of 2005. Tea exports during this period were US dollars 444 million, an 8.6 per cent increase over US dollars 409 million recorded during the first seven months of 2004. Other agricultural products also grew by 19 per cent to US dollars 101 million. Rubber exports declined by 30.5 per cent to US dollars 24 million in the first seven months of 2005 from US dollars 35 million in the corresponding of 2004. Coconut exports also declined by 9.4 per cent to US dollars 57 million from US dollars 63 million in 2004.
Industrial exports grew by 10.7 per cent driven by improved performance in food, beverages and tobacco, textiles and garments and rubber products. The food, beverages and tobacco sector grew by 62.2 per cent to US dollars 157 million in 2005 from US dollars 97 million last year. Despite the stagnated prices textile and garment exports grew at 6.4 per cent in the first seven months of 2005. Rubber based products, which emerged as a major contributor to export growth increased by 30.2 per cent to US dollars 191 million compared with US dollars 146 million during the corresponding period of 2004. Mineral amounted to US dollars 80 million, a growth of 12.3 per cent, due to increases in the exports of gems and other minerals.
Imports in the first seven months of 2005 grew by 10 per cent to US dollars, 4,838 million. Consumer good imports grew at 7.0 per cent due to increases in the imports of rice and wheat flour during the early months in 2005. Intermediate good imports grew by 12.5 per cent to Us dollars 2, 862 million in 2005 from US dollars 2,543 million in 2004. Value of imports of petroleum grew by 32.8 per cent to US dollars 840 million in 2005 reflecting the escalation of international oil prices. Fertilizer and chemical imports grew by 63 per cent and 30 per cent respectively. Textiles and clothing, however, declined marginally by 1.1 per cent to US dollars 845 million in the first seven months of 2005 from US dollars 854 million in the same period of 2004.
Investment good increased by 6.1 per cent on reflecting higher imports of transport equipment and building material. The transport equipment and building material grew by 21.6 per cent and 30.8 per cent respectively in the first seven months of 2005.