Exports and imports both declined from the previous year after the
second quarter, with exports contracting by 7.4% for the year and imports
by 5.8%. Weak global demand and lower prices explained most...
drop in exports. Earnings from garments, the island’s largest export,
fell by 2.3%, mainly owing to slack economic conditions in the US and
EU and the loss in 2010 of the Generalized System of Preferences Plus
facility previously offered by the EU. The loss of that concession continues
to cause garment factories to close. Agricultural exports, including tea,
contracted by 7.8% due to the drought and weaker prices.
The performance of imports reflected currency depreciation, some
higher tariffs, and central bank measures to restrict credit growth.
Except fuel, machinery, and building materials, imports of all other
import subcategories fell from a year earlier. Imports of consumer goods contracted by 18% and intermediate goods by 6%, while imports of investment goods rose by 5%. Fuel imports also increased by 5% as thermal power generation stood in for hydropower output constrained by
drought. Despite the fall in export earnings, the trade deficit narrowed by 4% to $9.3 billion. The post-conflict tourism boom continued in 2012, with the number of tourists visiting Sri Lanka surpassing 1 million in 2012 and
earnings from tourism expanding by 25.1% to reach $1 billion. Workers’
remittances also expanded rapidly by 16.3% to $6 billion. Increased labor
migration under the professional category and the expansion of formal channels for remitting money were the main factors boosting remittance inflows. These earnings held the current account deficit to an estimated
$3.5 billion, about 5.8% of GDP, a marked improvement from 7.8% a year earlier (Figure 3.21.7).
Source: Central Bank of Sri Lanka. http://www.cbsl.lk
(accessed 20 March 2013).
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