Responding to policy measures implemented early last year to curb non-essential imports, Sri Lanka's trade deficit in January 2013 recorded a 24 per cent year-on-year decline despite the decline in export earnings.
The policy measures adopted have therefore helped withstand the adverse impact of the slowing down of global demand on exports, the Central Bank said Tuesday releasing its External Sector Performance report for January.
The policy measures implemented early in 2012 to discourage non-essential imports have continued to ease pressure on the trade deficit and therefore on the current account balance, the Central Bank said.
Expenditure on imports declined by 21.3 percent, year-on-year, to US$ 1.507 billion in January 2013 while earnings from exports declined 18.2 percent, year-on-year, to US$ 726.7 million.
Imports of refined petroleum declined by 58.4 percent, year-on-year, in January 2013, partly due to increased hydro power generation. Decline in vehicle imports by 51.7 percent during January made the largest contribution towards the decline in expenditure on consumer goods imports.
As demand for exports remained fettered by the slow recovery of major export destinations, namely, the EU and the USA, the decline in export earnings continued into 2013, the Central Bank said.
While earnings from all major categories of exports declined in January, Industrial Exports which dropped by 20.7 percent mainly contributed to the decline. Exports earnings from textiles and garments declined by 8.9 percent.
However, tourist arrivals in January 2013 increased by 13.4 percent and earnings from tourism grew at a healthy rate of 20.5 percent to US$ 107.2 million.
Worker remittances grew 10.8 percent in January 2013 to US$ 524 million.
Inflows to the government, which include Treasury Bills and investments at the Colombo Stock Exchange, increased 146.2 percent in the month to bring in US$ 801.8 million.
Gross official reserves amounted to US$ 6.855 billion, while total international reserves which include gross official reserves and foreign assets of commercial banks, amounted to US$ 8.538 billion by end January 2013.