Sri Lanka’s exports hit record in October as money printing drives currency shortage

ECONOMYNEXT – Sri Lanka’s exports in October 2021 hit an all-time high of US $ 1,160 million, up 35% from the previous year, data from the Export Promotion Office showed as shortages currencies worsened amid money printing.

Clothing exports increased 42.8% to $ 509 million, exports of rubber products increased 14.5% to $ 91.9 million, tea fell 2.4% to 109, $ 5 million and coconut-based exports rose 25% to $ 77.7 million.

“This is the highest ever October merchandise export figure in our history,” said Export Development Board Chairman Suresh de Mel.

“The opening of Western markets as well as the sustained production in Sri Lanka can be attributed to this increase.”

The Sri Lankan rupee continued to be under pressure as money printing gave more purchasing power to domestic economic agents to stimulate imports.

In October, the central bank spent US $ 113 million to defend an unreliable peg at 203 to the US dollar while buying $ 41 million in buybacks despite the peg being weak.

The central bank complained that exporters are not converting enough dollars. However, if dollars are not converted, they cannot hurt the exchange rate, unless exports are financed by printed packaging credits.

In Sri Lanka, where classical economics is not widely known and mercantilist beliefs are prevalent, external problems are blamed on lack of exports or the trade deficit, rather than on money printing and trading operations. ‘open market.

The main export destination was the United States with US $ 291.3 million, up 47.8%, followed by the United Kingdom with US $ 88.5 million, India with US $ 77.6 million. US dollars up 72% and Germany’s $ 64.8 million up 72%.

Total exports through October stood at $ 10.05 billion, up 21% from the previous year.

Other exports that increased in October

Export revenue from electrical and electronic components increased 87.3% to Rs 38.4 million, with strong performance in insulated wires and cables, switches, boards and panels and electronic transformers.

Seafood exports increased 57% to Rs 24.5 million in October 2021 compared to October 2020.

“This increase is mainly due to increased export earnings from frozen fish, shrimp and shrimp, fresh or chilled fish and other edible fish.

To boost the shrimp industry, the Sri Lankan cabinet approved a proposal to provide concessional loans to shrimp farmers.

Another sector that export developers strongly encourage is boat building. In October 2021 alone, Sri Lanka generated $ 33.7 million from exports to Iraq alone.

The president of the EDB previously said at a virtual boat show that the island’s marine diversity makes it a potential nautical tourist destination that is boosting the development of the boating industry.

Therefore, he said, it is equally important to facilitate the development of nautical tourism activities such as boating, sailing, yacht rental, water sports for the benefit of the shipbuilding industry. .

Sri Lanka’s revised export target is $ 15.72 billion and so far it has earned $ 12.6 billion. (Colombo / Nov 19, 2021)

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