Despite a double-digit growth in exports earnings surpassing US$ 1 billion for the third-consecutive month, Sri Lanka’s trade deficit widened 7.5 percent to US$ 656 million in September 2017 from US$ 610 million a year earlier, according to the Central Bank data released in its External Sector Performance Review on Monday.
On a cumulative basis, in the first nine months of 2017, the trade deficit widened by 11.7 percent to US$ 6.84 billion from US$ 6.125 billion recorded during the same period of 2016.
This was mainly due to the additional import expenditure incurred due to the prevailed drought condition in the country, the Central Bank said.
Earnings from exports increased in September 2017 surpassing the US dollars 1 billion mark for the third consecutive month during the year as a result of improved garment exports to both the USA and EU market.
Accordingly, exports earnings increased by 12.6 percent to US$ 1.011 billion in September 2017. The growth in exports was mainly driven by industrial exports followed by agricultural exports.
On a cumulative basis, exports earnings during the first nine months of 2017 grew by 8.2 percent (year-on-year) to US$ 8.424 billion, with higher earnings from tea, textiles and garments, seafood exports, spices, and petroleum products.
However, expenditure on imports also increased by 10.5 percent (year-on-year) to US$ 1.668 billion in September 2017 from US$ 1.508 a year ago, particularly due to fuel imports.
On a cumulative basis, expenditure on imports during the first nine months of 2017 grew by 9.7 percent (year-on-year) to US$ 15.26 billion, largely due to higher imports of fuel, gold and rice.
In September 2017, earnings from tourism recorded a decline in comparison to September 2016 owing to the drop in number of tourist arrivals during the month.
Earnings from tourism decreased by 2.3 percent to US$ 249 million in September 2017 while on a cumulative basis, earnings from tourism increased by 2.9 percent to US$ 2.663 billion during the first nine months of 2017.
Workers’ remittances declined sharply by 16.7 percent to US$ 481 million in September 2017 from US$ 578 million a year earlier. The cumulative inflow from workers’ remittances declined by 7.4 percent to US$ 4.985 billion during the first nine months of 2017, relative to the corresponding period of 2016.
Despite the slower than expected improvement in the current account, the financial account of the BOP was strengthened during the month of September with continuous foreign inflows. The overall BOP During the first nine months of 2017 is estimated to have recorded a surplus of US$ 2.0 billion.
Sri Lanka’s gross official reserves, as at end September 2017, rose to US$ 7.3 billion, equivalent to 4.2 months of imports, while total foreign assets amounted to US$ 9.6 billion, equivalent to 5.6 months of imports.
The rupee recorded a modest depreciation of 2.5 percent against the US dollar from end 2016 up to 24 November 2017.