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Sri Lanka exports down 2.5-pct in Jan 2016, industrial exports upThursday, April 14, 2016 > 09:19:41
Sri Lanka's exports fell 2.5 percent to 893.9 million US dollars with weak commodity prices but industrial exports rose led by apparel and rubber, while imports continued to fall, an official said.
Apparel exports rose 13 percent and rubber exports rose 11 percent, during the month, taking total industrial exports to 711 million dollars, Additional Director of the Central Bank's Economic Research Department D Kumaratunge said.
Tea and spice exports were down from a year earlier, he said.
Sri Lanka's imports were down 5.5 percent to 1,589 million dollars, with vehicle imports down 13 percent in January, Kumaratunge said.
The trade gap fell 9.1 percent to 695 million rupees from 765 million dollars in January 2016, from a year earlier.
Sri Lanka has a trade gap because the country has foreign exchange earnings beyond merchandise good exports including remittances and tourism. Imports are also driven by net foreign borrowings.
In 2015 exports fell 5.6 percent to 10.5 billion US dollars and imports fell 2.5 percent to 18.9 billion US dollars with remittances and inflows to the government falling.
But the country experienced a balance of payments deficit and the currency crisis as money was printed to finance the deficit and to enforce a rate cut as credit recovered.
The printing of money prevented imports shrinking in line with the weakening net capital inflows.
Instead of halting money printing, Sri Lanka imposed restriction on car imports.
Credit will now shift to items other than cars.
In Sri Lanka Mercantilism is ingrained and most people believe that currency troubles are not a result of monetary instability but due to the trade deficit, particularly oil or car imports.
This year oil - the usual suspect - could not be blamed as oil prices collapsed. Mercantilist beliefs in Sri Lanka blame diesel in particular for inflation, resulting it being under-priced.
Due to prevailing Mercantilism the central bank has been able to print money, generate inflation or currency collapses and get away with it, though it is getting increasingly harder.