Imports in January remain at high level of $ 1.96 b despite forex shortage, curbs

Imports in January remained at record high levels despite a shortage of foreign exchange and restrictions.

Imports which reached a record high of $ 2.2 billion in December showed a similar trend in January at $ 1.96 billion reflecting a 23% increase year on year (yoy). In December the increase was 28.5%.

Higher imports in January dwarfed $ 1.1 billion of exports (up 17.5%) resulting in the trade deficit widening to $ 859 million as against $ 655 million in January last year.

Central Bank said the increase in imports was observed across all main categories, while intermediate goods imports mainly contributed to the expansion.

Expenditure on the importation of consumer goods increased by 4.2% in January over the month of January 2021, due to increases in both food and non-food consumer goods.

Import expenditure on food and beverages increased by 1.8% (yoy), mainly owing to the import of cereals and milling industry products (primarily rice). Expenditure on rice imports

exceeded $119 million during the period from November 2021 to January.

Decreases in import expenditure were observed in sugar, oils, and fats (mainly coconut oil), vegetables (mainly masoor dhal), seafood (mainly dried sprats), and spices (mainly coriander seeds). The importation of non-food consumer goods increased by 6.8%, led by the increase in the expenditure on medical and pharmaceuticals (mainly vaccines), clothing and accessories, and rubber

products.

However, the importation of telecommunication devices (mainly mobile telephones), home appliances (mainly televisions), and printed materials recorded decreases in January compared to January 2021.

Expenditure on the importation of intermediate goods increased by 32.5% (yoy) in January, driven mainly by fuel, textiles, textile articles (mainly fabrics), base metals (mainly iron and steel), and wheat and plastics and articles thereof (mainly polymers in primary forms).

Despite lower crude import volumes, expenditure on fuel imports increased by 38.9% in January, due to the increases in import prices as well as volumes of refined petroleum (including LP gas) and coal. The average import price per barrel of crude oil was $ 84.09 in January compared to $ 57.65 in January 2021 and $ 85.38 in December 2021.

Import expenditure on food preparations (primarily palm oil), agricultural inputs (mainly

animal fodder), fertiliser, and vehicle and machinery parts (mainly bicycle parts) declined during

January.

Expenditure on the importation of investment goods increased by 17.2% in January compared to the same month in 2021, due to substantial increases in building materials and machinery, and equipment. Compared to the month of January 2021, import expenditure on all subsectors under building materials, except aluminum articles, increased in January, led by iron and steel.

Turbines, electric motors, and generating sets contributed mainly to the increase in

expenditure on the importation of machinery and equipment, though a decline was recorded in

transmission device. Expenditure on importation of transport equipment declined mainly due to

lower imports of tankers and bowsers.

The import volume and unit value indices increased by 2.3% and 20.3%, respectively, (yoy), in January, implying that the increase in import expenditure in January was mainly driven by the price effect.

CBSL also said earnings from exports exceeded $ 1 billion for the eighth consecutive month with increases in earnings observed across all main categories, industrial exports mainly contributed

to the expansion.

Earnings from the exports of industrial goods increased by 21.6% in January compared to January 2021, with a broad-based increase was reported in almost all subcategories of Industrial goods, mainly in garments and petroleum products. Export of garments to all major markets improved, except for the United Kingdom (UK).

Earnings from the export of petroleum products increased due to the increase in both prices and volumes of bunker and aviation fuel exports.

Further, sizable increases were recorded in the exports of gems, diamonds and jewellery, base metals and articles, machinery, and mechanical appliances (mainly electric conductors and transformers), and printing industry products (mainly currency notes), although earnings from ceramic products decreased .

Total earnings from the exports of agricultural goods in January increased by 2.3% compared to January 2021, primarily due to the increase in export earnings from coconut (mainly desiccated coconut, fibres, and coconut oil), seafood (mainly fresh and frozen tuna) and minor

agricultural products (mainly areca nuts).

The export of natural rubber, vegetables, and unmanufactured tobacco also recorded marginal increases.

Meanwhile, export earnings from tea declined by 9.7% (yoy) due to both lower export volumes and export prices while earnings from spices declined by 16.7% (yoy), led by lower exports of cinnamon and cloves in January.

Earnings from mineral exports increased by 24.0% in January compared to January 2021, due to higher earnings from titanium ores, quartz, and natural graphite powder.

The export volume index increased by 20.1% and the unit value index decreased by 2.2%, (yoy), in January, indicating higher export volumes contributed to the increase in export earnings.

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