Sri Lanka's exports grew by 23.2 percent in January to 898 million U.S. dollars helped by a rebound in industrial products, latest data from the Central Bank showed on Tuesday.
Earnings from exports increased, reflecting the ongoing recovery in the global economy while expenditure on imports also increased, albeit at a lower rate, driven mainly by the increase in intermediate goods imports.
As imports increased by 7.9 percent to 1.6 billion U.S. dollars Sri Lanka's trade deficit contracted by 5.9 percent to 756 million U.S. dollars. "Earnings from industrial exports, which account for more than three fourths of total export earnings increased by 23.6 percent, yearon-year, to 692 million U.S. dollars in January 2014, reflecting an increase in earnings from all major industrial export categories except petroleum products," the Central Bank said.
Textiles and garments which is the main contributor to the growth in industrial exports grew by 23.4 per cent to 412 million U.S. dollars. The European Union and U.S. continued to be the major markets for textiles and garments of Sri Lanka representing around 85 per cent of the total garment exports.
Expenditure on intermediate goods imports increased by 22.3 percent, year-on-year, to 1.03 billion U.S. dollars mainly on account of the increase in fuel imports. "Expenditure on fuel increased by 68.1 percent, year-on-year, to 490 million U.S. dollars in January 2014 due to higher import of crude oil (by 41.2 percent), refined petroleum products (by 85. 4 percent) and coal (by 79.4 per cent)."
Sri Lanka's ongoing drought has resulted in the increase in imports of refined petroleum products due to greater dependence on thermal power generation as hydro power generation declined.
Despite the drought challenges Finance Ministry Secretary Dr. P. B. Jayasundara told reporters on Monday that the government's growth target of 7.8 percent would remain unchanged.
The Sri lankan government is also aiming to boost its export earnings, which were at 10.8 billion U.S. dollars in 2013 to 12 billion U.S. dollars in 2014.