S.Lanka January trade deficit widens to $610.8 mln

By Shihar Aneez

COLOMBO, March 27 (Reuters) - Sri Lanka's January trade deficit widened to a 3-year high of $610.8 million compared with last year as petroleum imports outstripped exports of garments and industrial goods, the central bank said on Thursday.

The January deficit rose 104.6 percent as imports jumped to $1.18 billion, up 49.2 percent, and export earnings increased a more modest 15.4 percent to $564.7 million from a year earlier.

"The rise in petroleum prices, which rose to $92.7 a barrel in January 2008, the highest recorded up to then, impacted on import expenditure," the central bank said in a statement.

The bank's economic research department, which compiles the data, said it was the highest monthly deficit the $27 billion economy had seen since 2003, and could be the highest ever except the bank only had three-year-old data on hand.

In a policy document earlier this year, the central bank said it expected full-year export growth of 10 percent and import growth of around 14 percent.

But skyrocketing global oil prices, which reached a record $111.80 a barrel on March 17, were boosting the import bill for Sri Lanka, which produces no crude of its own, the bank said.

The central bank predicts the full year trade gap to rise to $3.97 billion from $3.56 billion in 2007.

"Given the way crude oil prices are behaving, it is inevitable that there is going to be some pressure on that trade deficit to increase," said Channa Amaratunga, an economist at Boston Capital in Colombo.