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Export earnings and expenditure on imports in US dollar terms increased by 16 per cent and 19 per cent, respectively, during the first four months of 2004. This was an improvement compared with growth rates of exports and imports of 13 per cent each recorded during the first four months of 2003.

Industrial exports, dominated by garment exports, contributed 79 per cent of this increase. Agricultural exports, led by tea, and mineral exports, also made positive contributions to the growth in exports. The high growth in cumulative imports during the first four months of 2004 was reflected in all three major categories of imports, i.e., investment goods (51 per cent increase), intermediate goods (14 per cent increase) and consumer goods (9 per cent increase).

However, the increase in exports was not sufficient to cover the increase in imports and hence, the trade deficit expanded during the first four months of 2004 to US dollars 724 million, which was US dollars 158 million higher than that in the first four months of 2003. Foreign exchange inflows from other sources increased during this period reflecting the growth in tourism, port services and private transfers and relieved of the pressure on the foreign exchange market.

Export earnings in US dollar terms increased by 23 per cent in April 2004 as against the 21 per cent growth recorded in April 2003. Industrial exports, which contributed nearly 96 per cent to the growth, increased by 29 per cent in April 2004. This growth was supported by the agricultural and mineral exports which increased by 14 per cent and 102 per cent.

Expenditure on imports increased by 18 per cent in April 2004, compared with a 12 per cent growth in April, 2003. Consequently, the trade deficit increased to US dollar 259 million in April, 2004 from a deficit of US dollar 230 million in April, 2003.

Exports

Export earnings in April, 2004 amounted to US dollars 373 million, compared with US dollars 305 million in April, 2003. This better performance in exports was widespread reflecting increases in all sub categories. The cumulative export earnings during the first four months of 2004 were US dollars 1,738 million, compared with US dollars 1,502 million recorded during the corresponding period in 2003.

Earnings from textiles and garment exports increased by 9 per cent to US dollars 147 million in April, 2004 in comparison to US dollars 134 million in April, 2003. This was an outcome of increases in the export volume (5 per cent) and the unit price (4 per cent).

Earnings from industrial exports, other than textiles and garments, increased substantially by 59 per cent, continuing an upward trend in other industrial exports.

The higher growth of this component in April 2004 was attributable to increases in machinery, mechanical and electrical equipment (211 per cent), rubber based products (23 per cent), diamonds and jewellery (42 per cent), ceramic products (24 per cent), petroleum products (15 per cent), plastics (21 per cent) and chemicals (26 per cent).

Export earnings in April, 2004 from agricultural products increased by 14 per cent over April, 2003. Tea made a significant contribution of 65 per cent to the overall growth of agricultural exports.

Earnings from tea increased by 13 per cent in April, 2004. The volume of tea exports increased by 1.2 million kg in April, 2004, while the average price of tea too increased from US dollar 2.23 per kg in April, 2003 to US dollar 2.37 per kg in April, 2004. Tea production during the first four months of 2004 increased by 1.1 million kg to 102 million kg when compared with the first four months of 2003. Meanwhile, total tea exports increased by 12.9 million kg to 98.9 million kg during the first four months of 2004.

Earnings from rubber exports increased by 89 per cent in April, 2004. Both volumes and prices of rubber exports increased in April, 2004. Export earnings from coconut also increased significantly but this was entirely due to higher volumes of exports as the price declined. Earnings from minor agricultural products decreased by 12 per cent in April, 2004.

The decline was largely attributable to the lower earnings from the exports of un-manufactured tobacco, cloves and nutmeg and mace, which offset the positive impact of higher exports of cinnamon, pepper, vegetables, fresh and dried fruits and other minor agricultural products. The decrease in exports of un-manufactured tobacco was a result of higher usage of tobacco for domestic manufacturing industries.

Imports

Expenditure on imports, amounting to US dollars 632 million, increased by 18 per cent in April, 2004, compared with US dollars 535 million in April, 2003. The expenditure on imports during the first four months of 2004 was US dollars 2,462 million, an increase of 19 per cent over the imports of US dollars 2,068 million in the first four months of 2003. Import growth, excluding the imports of petroleum products, was 18 per cent.

All three major categories of imports increased in April 2004. Imports of intermediate goods increased by 5 per cent in April, 2004 partly attributable to the higher petroleum import prices. However, intermediate goods imports without petroleum products too increased by 6 per cent due to higher imports of textiles and other raw materials.

Food imports increased by 54 per cent, reflecting the higher imports of wheat grain, sugar, milk products, fish products, chillies and other food imports. The impact of partial duty waivers applied on lentils, big onions, chillies, potatoes and milk powder since February 1, 2004 and the full duty waiver granted on sugar imports from April 1, 2004 were partly reflected in the increased imports of such food items. Imports of non-food consumer goods increased 3 per cent, reflecting higher imports of motor cars and cycles and rubber tyres and tubes. Investment goods imports increased by 66 per cent over April, 2003.

Within this category, imports of machinery and equipment increased by 58 per cent mainly due to higher imports of fruit and vegetable processing machines, parts and accessories of data processing machines, industrial sewing machines and parts and accessories for generators.

Imports of building material increased by 104 per cent largely reflecting the higher imports of construction materials. Imports of transport equipment increased by 45 per cent due to high imports of goods transport vehicles and parts and passenger vans in April, 2004.

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