Earnings from exports increase, import expenditure declines

Earnings from exports increased by 6.0 per cent (year-on-year) to US dollars 12,026 mn during the eleven months ending November 2022 as a result of increased earnings mainly from exports of textiles and garments (11.6%), gems, diamonds and jewellery (58.8%), machinery and mechanical appliances(15.9%), petroleum products (13.9%) and minor agricultural products (23.1%).

This was stated in the latest Weekly Economic Indicators report of the Central Bank of Sri Lanka.

“Import expenditure declined by 8.3 per cent (year-on-year) to US dollars 16,865 mn during this period, mainly due to lower imports of machinery and equipment (-26.5%), base metals (-54.4%), telecommunication devices (-81.9%) and medical and pharmaceuticals (-36.9%). Accordingly, the deficit in the trade account narrowed to US dollars 4,839 mn during January-November 2022 from US dollars 7,054 mn in the corresponding period of 2021,” it stated.

It further noted:

The export unit value index increased slightly by 0.4 per cent, (year-on-year), in November 2022 due to higher prices registered in industrial and agricultural categories of exports. The import unit value index in November 2022 increased by 5.9 per cent, (year-on-year), mainly due to higher prices recorded in intermediate goods. Accordingly, the terms of trade deteriorated by 5.3 per cent, (year-on-year), to 88.9 index points in November 2022.

The Unemployment rate increased to 5.0 per cent in Q3 2022 from 4.6 per cent in Q2 2022. The Labour Force Participation Rate decreased to 49.0 per cent in Q3 2022 from 50.1 per cent recorded in Q2 2022.

IIP in November 2022 decreased by 23.9 per cent to 81.2 compared to November 2021. Among the major sub divisions of the manufacturing industries, “Coke and refined petroleum products” (94.9%) and “Chemicals and chemical products” (35.0%) have mainly contributed to this overall decrease.

During the period under review (07.01.2023 to 13.01.2023) crude oil prices increased mainly attributing to expectations for less aggressive US rate hikes along with the optimism over plausible demand recovery with the opening of China’s borders and improved global economic outlook. Overall, during the period under review, Brent and WTI prices increased by US dollars 4.71 per barrel and US dollars 4.13 per barrel, respectively.

Weekly AWPR for the week ending 13th January 2023 declined by 14 bps to 27.93 per cent compared to the previous week. Broad money (M2b) expanded by 15.3 per cent, on a year-on-year basis, in November 2022. Net Credit to the Government from the banking system increased by Rs. 114.2 bn in November 2022. Outstanding credit to public corporations declined by Rs. 17.4 bn in November 2022. Outstanding credit extended to the private sector declined by Rs. 30.9 bn in November 2022.

The reserve money decreased compared to the previous week mainly due to decrease in the deposits held by the commercial banks with the Central Bank.The total outstanding market liquidity was a deficit of Rs. 332.962 bn by the end of this week, compared to a deficit of Rs. 321.191 bn by the end of last week.

By 13th January 2023, the All Share Price Index (ASPI) decreased by 1.92 per cent to 8,262.58 points and the S&P SL 20 Index decreased by 3.25 per cent to 2,528.08 points, compared to the index values of last week.

During the ten months ending October 2022, government revenue and grants increased to Rs. 1,588.3 bn compared to Rs. 1,156.5 bn recorded in the corresponding period of 2021.

During the period from January to October 2022, total expenditure and net lending increased to Rs. 3,235.0 bn compared to Rs. 2,731.7 bn recorded in the corresponding period of 2021.

During the ten months ending October 2022, overall budget deficit increased to Rs. 1,646.7 bn compared to Rs. 1,575.2 bn recorded in the corresponding period of 2021.

During the ten months ending October 2022, domestic financing decreased to Rs. 1,619.4 bn compared to Rs. 1,717.4 bn in the corresponding period of 2021. Foreign financing recorded a net borrowing of Rs. 27.3 bn during the period from January to October 2022, compared to the net repayment of Rs. 142.2 bn recorded in the corresponding period of 2021.

Outstanding central government debt increased to Rs. 25,210.7 bn by end October 2022 from Rs. 17,589.4 bn as at end 2021. By end October 2022, total outstanding domestic debt amounted to Rs. 13,596.9 bn while the rupee value of total outstanding foreign debt amounted to Rs. 11,613.8 bn.During the year up to 13th January 2023, the Sri Lankan rupee appreciated against the US dollar by 0.2 per cent. Given the cross currency exchange rate movements, the Sri Lankan rupee depreciated against the Euro by 1.5 per cent, the pound sterling by 1.0 per cent, the Indian rupee by 1.8 per cent and the Japanese yen by 2.4 per cent during this period.The average price of tea in the Colombo auction increased to US dollars 3.84 per kg in November 2022 from US dollars 3.10 per kg in November 2021.