Sri Lanka’s exports declined the most in three years in July as a faltering global recovery sapped demand for the island’s garments, textiles, tea and rubber products.
Overseas sales fell 17.4 percent from a year earlier to $794.4 million, after declining 7.9 percent in June, the Central Bank of Sri Lanka said in a statement today. Imports slid 24.9 percent to $1.33 billion, leaving a trade deficit of $534.6 million.
Sri Lanka raised interest rates in February and April, let its currency weaken to a record low and increased energy prices as part of a policy overhaul to narrow the trade gap, which has pressured foreign reserves. The shortfall in July was the lowest in 17 months, the central bank said today.
“Policies adopted by the central bank and the government earlier in the year have led to a significant deceleration in expenditure on imports by July 2012,” it said.
Sri Lankan economic growth probably slowed to a more than two-year low of 6.8 percent last quarter, according to the median estimate in a Bloomberg News survey ahead of a report due this month.
The central bank is expected to keep its reverse repurchase rate at 9.75 percent and the repurchase rate at 7.75 percent, according to all six economists surveyed by Bloomberg News ahead of the policy meeting due on Sept. 18.
The island’s rupee, which has dropped about 13 percent against the dollar this year, was little changed at 132.25 a dollar at 10:26 a.m. in Colombo.