Economic Update 23 July 2015

Export earnings for May 2015 dipped 0.1% YoY to USD882.5 mn whilst cumulative export earnings for January to May witnessed a marginal growth of 0.2% YoY to
USD4.5 bn. Industrial exports which accounts for c.75% of the total export earnings rose c.3% YoY to USD661.3 mn for the month of May out of which textiles and garments dominated the cluster with an overall c.45% contribution to exports. The textiles and garments sub sector depicted a significant growth of 7.6% YoY to
record USD392.9 mn in May 2015 owing to the improved exports in both traditional and nontraditional markets. However the apparel exports to the European Union (EU) market fell 11.8% YoY in May continuing the declining trend observed since March 2015. USA, UK, India, Germany and China were recorded as the key merchandise exports regions for the first five months accounting to c.51% of total export earnings. Meanwhile the rubber products and gem, diamond and jewelry exports saw a dip of 2.3% and 29.8% YoY respectively backed by low global prices and demands. In addition agricultural export earnings decreased by c.10% YoY to USD217.0 mn in May, chiefly driven by poor performance in tea exports. Tea being the second largest export product accounting to c.14% of the total export earnings, witnessed a dip of 12.1% YoY to USD123.6 mn for the eighth consecutive month on the back of subdued global demands. Tea exports to Russia fell 19.2% YoY whilst exports to Middle East also witnessed a dip of 9.7% YoY. Moreover the ban on fisheries to the EU continued to subsidize to the decline in sea food export earnings, which further dipped 39.3% YoY to USD14.9 mn in May 2015. However in the coming months, we expect renewal in exports with the anticipated lifting of the ban on fisheries to the EU. In addition we expect further revival in the key contributing
textiles and garments sector with the possible resumption of the Generalized Scheme of Preferences (GSP plus) concession in 2016 from the key apparel exporting region, EU.
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