COLOMBO, (AFP) – Sri Lanka's trade deficit narrowed substantially this year thanks to increased demand for clothing exports to the United States and Europe, the island's central bank said Thursday.
Exports jumped 16.8 percent to $5.44 billion in the first six months of calendar 2014 compared to the same period last year, the Central Bank of Sri Lanka said.
Imports meanwhile declined 1.2 percent to $8.99 billion compared to the same period last year, the bank said. Overall, the trade gap reduced from $4.44 billion in the first six months of last year to $3.55 billion in the same period this year, the bank said.
Sri Lanka's exports in mainly garments to the EU jumped 34.6 percent while those to the US increased 12.1 percent, as Sri Lanka's $4.5 billion clothing sector recovers from a slowdown. "The rapid growth in the apparel industry indicates the ability of the industry to achieve the target for exports of $5 billion well before 2016," the bank said, releasing its trade review for the first six months of 2014.
The bank said retailers were increasingly turning to Sri Lanka, instead of traditional garment hubs such as Bangladesh which is under international pressure over safety standards and conditions following a string of deadly accidents.
Tourism earnings also increased strongly to $1.05 billion in the first six months of this year, up 33.8 percent compared to the same period last year.
Sri Lanka's economy recorded growth rates of over eight percent in the first two years after ending a decades-long separatist war in 2009, but since then expansion has slowed.
Foreign worker remittances also increased 10.6 percent to $3.36 billion over the same period last year, the bank said.
The International Monetary Fund noted last month that Sri Lanka was one of the fastest growing economies in South Asia, but the island was also vulnerable to sudden external shocks because of high levels of foreign commercial borrowings.
Sri Lanka's foreign borrowings were $42.4 billion by the middle of this year, up from $39.7 billion at the end of last year.