The trade deficit for February 2009 contracted by 75.5 year-on-year to record US$ 78 million, the lowest in four years. In February last year, the trade deficit stood at US$ 317 million.

Meanwhile, the cumulative trade deficit for the first two months of the year dropped by 72 percent to US$ 262 million from US$ 937 million recorded during the corresponding period in 2008.

The Central Bank says the contraction in the trade deficit is a result of a sharp decline in imports which significantly outpaced the decline in exports.

Imports…

According to figures released by the Central Bank, imports declined by 37.3 per cent to US$ 602 million in February 2009 from US$ 959 million last year.

"Expenditure on intermediate goods declined by 42.7 per cent in February 2009 to US dollars 289 million, led by petroleum imports, which accounted for nearly one third of this as crude oil prices continued to hover around US dollars 45 per barrel," the Central Bank said in a statement yesterday.

During the month, consumer goods declined by 33.1 per cent to US dollars 142.1 million and sugar imports declined too, despite the increases in the average import price by 19.5 per cent in February 2009.

Motor vehicles imports declined by 78.6 percent while textiles and garment imports declined by 21.8 percent and investment goods declined by 31.2 percent to US$ 165 million in February 2009.

The cumulative expenditure on imports decreased by 40.2 per cent to US$ 1.2 billion by end February 2009, down from US$ 2.1 billion in the corresponding period of January-February 2008.

Exports…

Export earnings from all major sectors declined by 18.4 percent in February 2009 to US$ 524 million from US$ 642 million last year.

Agricultural, industrial and mineral exports declined by 31 percent, 13.4 percent and 45.5 percent respectively.

Export earnings from tea contracted by 33.4 percent.

However, apparel exports to the US and EU have increased by 1.5 percent and 15.4 percent during the month.

"Textiles and garments, which are the major subcategories within the industrial exports, grew by 7.0 per cent, helping to contain the impact of negative growth in other subcategories," the Central Bank said.

It said tea and rubber, recorded year-on-year declines, due to depressed demand and lower prices. Exports of coconuts increase despite the lower prices in the international markets.

The cumulative earnings from exports have declined during the first two months of 2009 by 15.2 percent to US$ 1 billion down from US$ 1.19 billion in last year.

The Central Bank used to publish the Balance of Payments position which it discontinued sometime last year as reserves began to drop. Remittances had in the past helped keep the Balance of Payments position in surplus but a deficit was recorded during the second half of 2008.