Sri Lanka's cumulative trade deficit for the first ten months of this year has declined for the second consecutive month in October, the Central Bank said Thursday releasing its external sector performance review.
Responding to policy measures adopted earlier in the year, the trade deficit from January- October 2012 has declined by 1.0 percent compared to the same period previous year to US$ 7.59 billion.
Import expenditure during the first ten months of 2012 declined 4 percent amounting to US$ 15.754 billion.
The main contributors to the decline in import expenditure included drop of imports of gold, fertilizer, and to some extent crude oil as crude oil was not imported during the month of October.
However the expenditure on crude oil was offset to a large extent by increased imports of refined petroleum products, the Central Bank noted.
Demand for Sri Lanka's exports also has declined due to the slow recovery of advanced economies in the world, particularly, Sri Lanka's two biggest markets, the US and the Europe.
According to Central Bank, earnings from exports declined in October 2012 with earnings from agricultural exports as well as industrial exports declining.
Earnings from tea, which account for about 14 percent of total earnings from merchandise exports, declined in October mostly due to the troubled situation in the Middle East.
Earnings from rubber, coconuts and coconut products also declined in October.
Accordingly, earnings from exports declined by 6.6 percent, year-on-year, in the first ten months of 2012 to US$ 8.164 billion.
However, earnings from tourism and workers' remittances increased cushioning the losses in other sectors.
Tourist arrivals during the first ten months of 2012 grew by 16 percent, compared to the same period last year, to 774,151, and in parallel earnings from tourism grew, by 22.1 percent, to US$ 790.5 million.
Workers' remittances this year amounted to US$ 4.941 billion, showing a growth of 17.6 percent, from 2011.
Gross official reserves amounted to US$ 6.547 billion by end October 2012, the Bank said.