External sector performance – June 2021
The deficit in the trade account widened on a year-on-year basis for the fourth consecutive month in June 2021. Both exports and imports were significantly higher in June 2021 compared to June 2020. Considering the first half of the year, although exports recorded a healthy growth, import expenditure increased at a higher pace. Workers’ remittances recorded a year-on-year decline in June 2021, while earnings from tourism remained at minimal levels. In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) continued to record marginal net outflows during the month. The Sri Lankan rupee remained broadly stable in June 2021.
Trade Balance and Terms of Trade
Trade Balance: The deficit in the trade account widened on a year-on-year basis to US dollars 652 million in June 2021 compared to the deficit of US dollars 161 million recorded in June 2020. The cumulative deficit in the trade account in the first half of the year also widened to US dollars 4,316 million from US dollars 3,262 million recorded in the corresponding period in 2020, and US dollars 3,597 million recorded in the corresponding period in 2019. The major contributory factors for this outcome are shown in Figure 1.
Terms of Trade: Terms of trade, i.e., the ratio of the price of exports to the price of imports, deteriorated by 16.7 per cent in June 2021 compared to June 2020, as the increase in import prices were higher than the increase of export prices, compared to June 2020.
Performance of Merchandise Exports1
Overall exports: Earnings from merchandise exports in June 2021 recorded an increase of 12.6 per cent to US dollars 1,007 million on a year-on-year basis. Cumulative export earnings from January to June 2021 amounted to US dollars 5,699 million, compared to US dollars 4,413 million recorded in the corresponding period in 2020 and US dollars 5,999 million recorded in the corresponding period in 2019. Exports improved by 12.9 per cent in June 2021 over May 2021.
Industrial exports: Earnings from the export of industrial goods increased by 16.6 per cent in June 2021 compared to June 2020, with a broad-based increase in export earnings under most of the categories. Substantial increases were noted with respect to rubber products (tyres and gloves), petroleum products, machinery and mechanical appliances (all subcategories), textiles and garments, gems, diamonds and jewellery, and base metals and articles. Increase in earnings from petroleum products was due to the increase in unit values of bunker fuel along with some improvement in quantities supplied. Despite the ongoing pandemic related disruptions, the main export segments also recorded increased earnings on a month-on-month basis. Total earnings from industrial exports from January to June 2021 amounted to US dollars 4,408 million with a growth of 31.3 per cent from the same period in 2020.
Agricultural exports: Total earnings from the export of agricultural goods in June 2021 remained around the same values recorded in June 2020. Earnings from tea exports increased due to improvement in export volumes while the export unit value declined. Further, earnings from exports of coconut (both kernel and non-kernel products), spices (such as pepper and cloves) and unmanufactured tobacco increased. In contrast, there was a decline in export earnings from seafood, minor agricultural products (fruits, arecanuts, betel leaves, etc.) and vegetables (fresh, frozen, dried, preserved, etc.). Total earnings from agricultural exports during the first half of 2021 amounted to US dollars 1,259 million, with a growth of 21.2 per cent from the same period in 2020.
Mineral exports: Earnings from mineral exports were higher in June 2021 than in June 2020 with increases in earnings from earths and stone as well as ores, slag and ash. Total earnings from mineral exports from January to June 2021 amounted to US dollars 25 million.
1 Exports classified according to Standard International Trade Classification Revision 4 are presented in Annex I
Export indices: The export volume and unit value indices increased by 8.9 per cent and 3.4 per cent, respectively, on a year-on-year basis in June 2021. These indicate that the increase in export earnings, on a year-on-year basis, was due to the combined impact of higher export volumes and prices.
Performance of Merchandise Imports2
Overall imports: Expenditure on merchandise imports increased by 57.2 per cent to US dollars 1,659 million compared to US dollars 1,055 million recorded in June 2020. The increase in import expenditure was observed across all main categories of imports, namely, consumer goods, intermediate goods and investment goods, although expenditure on petroleum imports was low due to low import volumes during June 2021. On a cumulative basis, total import expenditure in the first half of 2021 amounted to US dollars 10,015 million, compared to US dollars 7,675 million recorded in the corresponding period in 2020 and US dollars 9,596 million recorded in the corresponding period in 2019.
Consumer goods: Expenditure on the importation of both food and beverages and non-food consumer good categories increased substantially in June 2021 compared to a year ago. Expenditure on food and beverages increased by 61.9 per cent to US dollars 165.0 million with a broad-based increase in all categories, except seafood. However, the largest contribution to the increase in total food bill was from dairy products (mainly milk powder, but also cheese and butter), and oils and fats (mainly coconut oil, but also other types of oil). Expenditure on non-food consumer goods increased by 47.6 per cent to US dollars 217.2 million, contributed mainly by medical and pharmaceuticals (mainly vaccines), home appliances (televisions, rice cookers, fans, refrigerators, etc.), mobile phones, rubber tyres and tubes, etc. Total expenditure on the importation of consumer goods in the first half of 2021 amounted to US dollars 1,912 million, which is an increase of 7.3 per cent compared to the same period in 2020.
Intermediate goods: Expenditure on importation of intermediate goods in June 2021 increased by 48.5 per cent over June 2020, despite the 40.0 per cent decline in the expenditure on fuel. Expenditure on fuel declined due to non-importation of crude oil and low import volumes of other types of petroleum, taking into consideration the availability of sufficient stocks. The expenditure on almost all other types of intermediate goods increased, except fertiliser, mineral products and unmanufactured tobacco, reflecting increased economic activity in the country as well as increased commodity prices in the world market. Total expenditure on importation of intermediate goods during the first half of 2021 amounted to US dollars 5,950 million with an increase of 42.8 per cent from the same period in 2020.
SLTMobitel-PEOTV and DP Education launch ‘Videsa DP Education’
SLT-MOBITEL, the National ICT, Telecommunications and Mobile Services Provider has teamed up with DP Education, to launch ‘Videsa DP Education’, a dedicated educational channel on CH.215 of SLTMobitel–PEOTV, ensuring school children from Grade Five to Advanced Level have access to a high-quality learning experience with Rewind TV.
The revolutionary services of SLTMobitel-PEOTV includes ‘Videsa’ a series of educational channels hosted on the platform, that comprise of 06 TV channels dedicated to individual grades covering grades 06 to 11, that enhance the knowledge sharing with curriculum-centered lessons from a panel of reputed teachers. DP Education, a unique online learning platform, leverages digital solutions to deliver quality education to empower students. Together, Videsa and DP Education, enrich the educational arena further with the ‘Videsa DP Education’ channel, a dedicated television space for the students at home.
This path-breaking partnership is a commitment by SLTMobitel–PEOTV to support the education of children, whose options are limited due to the challenges convergence posed by the COVID-19 pandemic. The initiative will use the home TV screen and mobile devices as a ubiquitous medium to impart knowledge providing access to quality education for students across the country.
Commenting on the initiative, Rohan Fernando, Group Chairman, SLT said, “We understand that parents are now faced with the challenge of keeping their children safe during the pandemic as well as having to deal with the ongoing disturbances to their children’s education. As a solution to ensure that their learning remains uninterrupted, we have already introduced six different channels for Grade 6 to Grade 11 students through our Videsa digital platform. Our latest initiative and partnership with DP Education has now enabled us to launch a dedicated channel with unique learning experiences in key subjects such as Mathematics, Science and English for students from Grade 5 to Advanced Level with the Rewind TV facility. We are appreciative of the exceptional efforts extended by Mr. Dammika Perera and his team at DP Education and are grateful for the opportunity to connect the two learning platforms together in unison to create a revolutionary learning experience for our children”.
Thornton and Dane’s combined projects portfolio tops Rs 5.9 billion
Thornton Engineering, the Nextventures owned civil engineering company, has announced the acquisition of a 100% stake in Dane Engineering (Pvt) Ltd. for Rs 350 million, creating a construction business with a combined portfolio of Rs 5.9 billion.
The new entity, Thornton and Dane Engineering, expects to add new construction projects with a cumulative value of Rs 5 billion within the current financial year, nearly doubling its projects portfolio, the Company said in its announcement.
“We are excited at the post-acquisition prospects for the new company, because we strongly believe that it is a good example for the concept of the whole being greater than the sum of its parts,” said Thornton and Dane Director Dinesh Schaffter. “The combined strengths of Thornton and Dane create a formidable as well as extremely flexible engineering company that is capable of executing projects of varying scope and scale.”
Capacity-building programs for SMEs
Sri Lanka Chamber of Small and Medium Industries (SLCSMI), the apex body for SMEs in Sri Lanka has been at the forefront in supporting the SMEs during the pandemic. The chamber took several measures since the pandemic first hit the country in the first quarter of 2020. The Webinar series “Way Forward for SMEs” was a grand success among other initiatives, which was conducted with the participation of prominent scholars, leading business personalities as well as top rankers of state and private sector organizations.
The president of SLCSMI, Prof. Rohan De Silva said: “We are always there to represent and support the SMEs in the country and that’s our prime duty. During the first wave, we understood the need to share the knowledge and provide psychological support for the business owners to withstand the difficult times and that’s how the webinar series was born. Our initiative was well received by the businesses and our audience was not limited to Sri Lanka alone, as we witnessed participants from around 12 countries.”
Prof. Rohan further said that the chamber has looked at the possibilities of providing sustainable solutions to the SMEs beyond merely conducting knowledge sharing sessions and the Executive Committee has decided to introduce a range of Capacity Building programs to develop the SMEs. These programs include different solutions to address various gaps among the SMEs and the chamber intends to issue a valuable certificate for the participants of these programs.
The chamber has partnered with the Asia Pacific Institute of Money and Entrepreneurship Development (iMED) to design and deliver the programs and the details of the Programs will be unveiled at the launching event scheduled to be held on the 25th of September.
‘Ratwatte’s boorish actions unbecoming of a Minister’
CTU: ‘Grant demands of principals and teachers before school reopening’
SL – India economic and democratic cooperation extensive – Speaker
7-billion-rupee diamond heist; Madush splls the beans before being shot
The Burghers of Ceylon/Sri Lanka- Reminiscences and Anecdotes
Unfit, unprofessional, fat Sri Lankans
Sports5 days ago
Killi; Sri Lanka’s Mr.Cricket
news2 days ago
Private member’s Bill deemed unconstitutional:Tissa says he only complied with ‘Bills Office’ request
news6 days ago
‘No person can own elephants in Sri Lanka’ – Jagath Gunawardena
Features4 days ago
Ivermectin – A possible win-win situation
news6 days ago
Sinopharm best for kids – Prof. Vitharana
news4 days ago
Govt. urged to stop foreign scholarships awarded on basis of ethnicity
Features5 days ago
Remembering Dr. Tissa Wickremasuriya
Features5 days ago
SRI LANKA SHOULD CLOSE DOWN MOST OF OUR OVERSEAS MISSIONS AS A STEP TOWARDS REDUCING PUBLIC EXPENDITURE