During the first nine months of 2008, exports increased by 11 percent to around US$ 6,245 million, while imports recorded a 30 percent increase incurring around US$ 10,669 million. The growth in exports was mainly driven by the agricultural sector exports which grew by 33 percent during the period under review, Fiscal Management Report 2009, which was presented by the Ministry of Finance and Planning Sri Lanka stated.

Favorable conditions prevailed in the tea and rubber sectors with increased output and higher international prices have mainly contributed to the noteworthy performance of the agriculture sector. The fruits and vegetables export also increased by 42 percent during the period.

Apart from agriculture sector, industrial sector led by garment industry too has shown a modest growth of 2.8 percent, earning value of foreign exchange in the region of US$ 2,542 million. Slowdown of the world economy during this period has adversely affected the anticipated growth in the garment industry, the report noted.

Phenomenal escalations in global oil and food prices during the period under review, resulted in a bigger than expected surge in the country's import bill recording an increase of 30.3 percent. Global oil prices peaked to US$ 147 per barrel during the month of July 2008, though a downward trend in global oil prices was seen towards the latter half of the year.

According to the report, out of the country's total import bill of US$ 10,669 million during first nine months in 2008, US$ 2,746 million or 26 percent of the total import bill was spent on oil imports as opposed to 21 percent spent on oil imports during the corresponding period in the previous year. Import cost of intermediate goods other than petroleum products also increased substantially by 23 percent to US$ 3,123 million, mainly due to higher international

Fertilizer prices which were increased by almost three fold during the period under review. In addition to higher fertilizer prices, major infrastructure development projects undertaken during the year 2008 including the construction of major high ways, flyovers, expansion work of four major ports, also have largely contributed to the high import cost of investment goods, which recorded a 37 percent increase corresponding period of 2007.

As such, skyrocketing prices of fuel and other intermediate products in the international markets have resulted in widening the country's trade deficit to US$ 4,424 million during first nine months of 2008. Yet, increased remittances and higher service receipts helped partly mitigating the adverse impact of widening trade deficit on the county's Current Account Balance.

During the period under review, worker remittances recorded a healthy net earnings of US$ 1,710 million compared to US$ 1,403 million earned during the corresponding period in the previous year. Departures for foreign employment increased by 23 percent during the first half of 2008.

Overall, county's current account has shown a deficit of US$ 1,888 million during the first half of the year 2008, an increase of US$ 1,200 million, over the current account deficit of the first half of 2007, the report noted.