Export earnings during the first half of the year declined by 17% to US$ 2,012 million, when compared with the same period last year, data on a Central Bank report showed. Likewise imports during the corresponding period declined by 11% to $2,875 million. The trade deficit during the comparative period increased by 11% to $863 million. Following is the text of this release.

"In June, both exports and imports in US dollar terms declined compared with the performance in June of last year. Export earnings declined by 23% in June, 2002, when compared with a decline of 5% experienced in June of last year. The expenditure on imports too declined by 9% when compared with a decline of 25% in June, 2001. The net result of this development was a higher trade deficit of $ 130 million in June, in comparison with a deficit of US dollars 74 million in June, 2001.

Export earnings during the first half of the year declined by 17% while imports declined by 11%. The trade deficit during the first half of the year increased by 11% to 863 million, compared with a deficit of 779 million recorded during the corresponding period last year. The recovery in the importation of intermediate goods was continued in June, 2002, which indicates potential growth in exports in the period to come.

Exports

Export earnings in June, were US dollars 336 million compared with US$ 437 million in June of last year. The cumulative export earnings during the first half of the year were 2,012 million compared with earnings amounting to 2,432 million recorded during the corresponding period last year.

Earnings from textiles and garment exports declined by 32% to US 163 million in June of this year. The decline was a result of 23% drop in volume and a 12% drop in unit price. The decline in textile and garment exports was largely attributable to a lower demand from USA, the UK, Canada and Germany. However, earnings from textiles and garment exports were higher than that of May due to improved prices.

Average prices of textiles and garments showed an increasing trend in May and June, though they were lower than that of the corresponding months last year. All other industrial exports together declined by 14% reflecting lower exports of machinery, mechanical and electrical equipment 12%, crustaceans and molluscs 72% petroleum products 31% travel goods 29% tableware 28% footwear 26% and plastics 32%. However, improvements were shown in categories, viz, earnings from rubber based products 10%, chemical products 20% fish products 15% articles of wood 82% wall tiles 17% and tinned or bottled fruits 26%.

Earnings from agricultural products declined by 12% due to a decrease in the export of tea, coconuts, cloves, vegetables and fruit exports. Rubber, Pepper, cinnamon, unmanufactured tobacco, nutmeg and mace and betel leave exports improved in June, last year. Earnings from tea at 52 million recorded a decline of 19% in June, when compared with June of last year due to lower prices and a decline in volumes of exports. In June, volume of tea exports declined by three million kilograms, while average price of tea declined to US$ 2.17 per kg from US$ 2.22 per kg in June of last year. With a tea production of 26 million kilos in June, tea production indicated an increase of 472,088 kilos during the first half of the year.

Imports

Expenditure on imports at 465 million recorded a decline of 9% in June of this year mainly due to lower expenditure on food and drinks, investment and defence related imports. The expenditure on imports during the first half of the year was US 2,875 million, a decline of 11% over the first half of last year.

The import of consumer goods declined by 26% in June of this year. Within this category, food and drink imports dropped by 46% due to the low import cost of wheat, sugar, lentils, milk products, big onions, potatoes, dried fish and chillies. Wheat imports in June were lower due to accumulated stocks in May. However, lower imports of chillies and dried fish in June were partly due to the higher import duty applied on these products since March. Imports of non-food consumer goods increased by 8%. Within this category, motor cars and cycles recorded an increase of 108% over June of last year. Intermediate good imports increased by 6% due to the higher imports of textiles, diamonds, petroleum products, chemical elements and compounds and dyes and colouring materials. This increase was entirely attributable to a higher volume of imports as import prices declined. Expenditure on crude oil, paper and paper boards declined due to lower prices. Expenditure on investment goods declined by 16% in June. In this category, volume of machinery and equipment imports showed an improvement while transport equipment and building materials showed declines over June of last year. The overall result of these developments has been an increase in the trade deficit in the first half of 2002 by US$ 84 million to US$ 863 million.