Bittersweet indices on Sri Lanka’s export and import unit values

Sri Lanka’s export unit value index increased in July 2022 significantly, but its import unit value index eclipsed the gains made by the former, according to Weekly Economic Indicators of the Central Bank of Sri Lanka (CBSL).The export unit value index increased by 14.6 per cent, (year-on-year), in July 2022 due to higher prices registered in all major categories, namely industrial, mineral and agricultural exports, CBSL said.

However, the import unit value index in July 2022 increased by 18.1 per cent, (year-on-year), due to higher prices recorded in intermediate and investment goods. Accordingly, the terms of trade deteriorated by 3.0 per cent, (year-on-year), to 91.2 index points in July 2022, CBSL said.Meanwhile, the average price of tea in the Colombo auction increased substantially to US dollars 4.08 per kg in July 2022 from US dollars 2.96 per kg in July 2021.

Further according to the report:

Net credit to the government and outstanding credit to public corporations from the banking system increased by Rs. 129.5 billion and Rs. 24.9 billion respectively, in July 2022.However, outstanding credit extended to the private sector declined by Rs. 41.0 bn in July 2022.

Index of Industrial Production (IIP) in July 2022 decreased by 22.0 per cent to 85.6 compared to July 2021. Among the major sub divisions of the manufacturing industries, “Coke and refined petroleum products” (98.5 per cent) and “Other non-metallic mineral products” (37.7 per cent) have mainly caused to this overall decrease.

During the year up to 09th September 2022, the Sri Lankan rupee depreciated against the US dollar by 44.6 per cent. Given the cross currency exchange rate movements, the Sri Lankan rupee depreciated against the Indian rupee by 40.7 per cent, the Euro by 37.7 per cent, the pound sterling by 35.4 per cent and the Japanese yen by 30.9 per cent during this period.Weekly AWPR for the week ending 09th September 2022 increased by 51 bps to 26.27 per cent compared to the previous week.

By 09th September 2022, the All Share Price Index (ASPI) increased by 4.16 per cent to 9,704.21 points and the S&P SL 20 Index increased by 4.04 per cent to 3,131.29 points, compared to the index values of last week.Outstanding central government debt increased to Rs. 21,696.6 bn by end March 2022 from Rs. 17,589.4 bn as at end 2021.

During the period under review (03.09.2022 to 09.09.2022), crude oil prices were largely on a declining trend. At the beginning of the period, prices increased due to OPEC+‘s decision on output cuts. However, prices decreased later on prospects of further tightening of monetary policy globally and fears of recession and the COVID-19 lockdowns in China causing a weakening of fuel demand. Overall, during the period under review, Brent and WTI prices decreased by US dollars 5.46 per barrel and US dollars 4.92 per barrel, respectively.

The gross official reserves were provisionally estimated at US dollars 1,716 mn as at end August 2022.Broad money (M2b) expanded by 16.0 per cent, on a year-on-year basis, in July 2022.

Earnings from exports increased by 12.9 per cent (year-on-year) to US dollars 7,678 mn during the seven months ending July 2022 as a result of increased earnings mainly from exports of textiles and garments (20.0%), petroleum products (51.9%), gems, diamonds and jewellery (50.2%), machinery and mechanical appliances (12.1%) and food, beverages and tobacco (9.3%). Import expenditure decreased slightly by 3.5 per cent (year-on-year) to US dollars 11,315 mn during seven months ending July 2022, mainly due to lower imports of machinery and equipment (-17.0%), base metals (-44.0%), telecommunication devices (-80.6%) and medical and pharmaceuticals (-30.6%). Accordingly, the deficit in the trade account narrowed to US dollars 3,637 mn during the seven months ending July 2022 from US dollars 4,922 mn in the corresponding period of 2021.

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