Feb 09, 2013 (LBO) – Sri Lanka’s exports fell 7.4 percent to 9.7 billion US dollars in 2012 from a year earlier and imports fell 5.8 percent to 19.0 billion dollars, shrinking the trade gap 4.1 percent to 9.3 billion dollars. A trade deficit is caused by additional spending power domestic economic agents receive over and above merchandise exports.
An exchange rate weakens when the Central Bank injects additional money into the banking system increasing the spending power of domestic economic agents, over and above foreign currency inflows.
In December 2012 exports fell 6.7 percent to 871 million US dollars, imports plunged 19.4 percent to 1.51 billion US dollars shrinking the trade gap 32 percent to 641 million dollars, according to Central Bank data.
Exports of agricultural products rose 2.9 percent to 217.4 million dollars with tea rising 4.0 percent 138.3 million US dollars.
Industrial exports however fell 10.6 percent to 643.7 million US dollars. Apparel fell 6.4 percent to 357 million dollars, partly due to lower selling prices from declining cotton prices, the Central Bank said.
Imports of consumer goods, which include motor vehicles fell 26 percent to 240.2 million US dollars. Intermediate go