Workers’ remittances up 10.3 percent to $2,481 million:

Trade deficit contracts for ninth month

The trade deficit contracted for the ninth consecutive month in September 2009 by 62.2 percent to US dollars 220 million. The cumulative trade deficit decreased by 60.0 percent to US dollars 1,848 million during the first eight months of 2009 from US dollars 4,615 million in the corresponding period of 2008.

Workers’ remittances increased by 10.3 percent to US dollars 2,481 million during this period. As a result, workers’ remittances during the first nine months of 2009 were US dollars 634 million (about 34 percent) in excess of the trade deficit, a media release from the Central Bank said. Earnings from exports, which took on an increasing trend since April 2009 reversed in September following the usual seasonal pattern.

Accordingly, export earnings in September 2009 amounted to US dollars 568 million reporting a decline of 12.8 percent, year-on-year.

The largest contribution to this decline came from the industrial exports, which declined by 12.4 percent mainly due to lower exports of garments and textiles, food, beverages and tobacco, machinery and equipment. Export earnings from garments and textiles exports declined by 4.9 percent to US dollars 241 million in September 2009. While garment exports to the US declined by 19.5 percent, in September, exports to the EU increased by 8.6 percent.

The food, beverages and tobacco subsector, which declined by 27.6 percent in September 2009, was led by lower exports of fish.

Within the agricultural exports, however, tea continued to perform well, in terms of prices, despite the year-on-year reduction in earnings by one percent. The average export price of tea continued to increase and reached a record high of US dollars 4.47 per kg in September 2009, reflecting a year-on-year growth rate of 4.4 percent.

The reduction in earnings from tea exports in September was largely due to lower export quantities, which could be attributed to the labour unrest and heavy precipitation in the major tea growing areas.

Earnings from exports of coconut oil, fresh coconuts and coconut fibre based products also increased in September 2009, due to enhanced export volumes. Rubber export earnings declined by 43.1 percent in September mainly due to the lower export prices compared to September 2008.

Export prices of rubber, which has taken an increasing trend since April 2009, reached US dollars 1.89 per kg in September 2009, albeit recording an year-on-year decline of 34.5 percent.

Although earnings from minor agricultural crop exports declined by 27.8 percent in September 2009, there were increases in export earnings from coffee, cocoa products, pepper, cloves and nutmeg due to volume increases.

Earnings from mineral exports recorded a decline of 32.4 percent, largely due to lower gem exports. Cumulative earnings from exports during the first nine months of 2009, declined by 16.8 percent to US dollars 5,119 million compared to the corresponding period of 2008.

Expenditure on imports declined by 36.1 percent to US dollars 789 million in September 2009, reflecting lower demand across all three major categories of imports.

Imports of intermediate goods, which accounts for 57 percent of imports, declined by 41.3 percent to US dollars 451 million, mainly due to the lower expenditure on imports of petroleum and fertilizer due to their lower prices, the release said.