Even as the stocks tumbled for the second successive day over the arrest of the Sri Lankan-born U.S. business tycoon Raja Rajaratnam and the uncertainty prevailed over extension of tariff concessions by the European Union (EU) to the textile industry, the Central Bank of Sri Lanka (CBSL) presented a rosy picture of the economy.

Stock market reports said decline in the prices of large cap stocks brought down the indices at the Colombo Stock Exchange with the more sensitive MPI losing 151 points (-4.34 per cent). Most of the companies in which the firm of Mr. Rajaratnam had stakes experienced fall.

However, in its latest report on “External Sector Performance -- August 2009” the CBSL was upbeat and went to the extent of saying, “Exports will continue to increase during the remaining months of 2009 and in 2010, notwithstanding the uncertainties on the continuation of GSP+ concessions.”

It said the trade deficit contracted for the eighth consecutive month in August 2009 by 76.9 per cent to $116 million, recording the third lowest trade deficit during the last five years and the cumulative trade deficit decreased by 59.6 per cent to $1,627 million during the first eight months of 2009 from $4,032 million in the corresponding period of 2008.

“Workers’ remittances increased by 9.9 per cent to US dollars 2,195 million during this period. As a result, Workers’ remittances during the first eight months of 2009 were US dollars 568 million (about 35 per cent) in excess of the trade deficit.

“Earnings from exports, which took on an increasing trend since April 2009, reached US dollars 710 million in August, recording the highest monthly value thus far in 2009”.