Sri Lanka trade deficit down amid weak credit in May

(L-R) : Jeevith Senaratne, Director Operations - Star Garment Group; Shanaka Rabel, Group Chief Digital and Transformation Officer - Stretchline Holdings Ltd; Janaka Botejue, Chairman – Bernard Botejue Industries; Sanjeewa Kodikara, Chief Information Officer- Hirdaramani Group

July 14, 2014 (LBO) – Sri Lanka’s exports rose 11.1 percent to 882.1 million US dollars in May 2014 from a year earlier led by apparel exports that rose 14.5 percent to 365.1 million US dollars, official data showed. Agriculture exports rose 21.1 percent to 239.9 million US dollars with tea up 9.7 percent to 140.6 million US dollars.

Imports fell 17.6 percent to 1,275.5 million US dollars with investment goods down 25.2 percent to 279.9 million US dollars and fuel imports down 35.4 percent to 208.4 million US dollars.

Rising exports would usually trigger more imports, but Sri Lanka is currently experiencing weak credit growth resulting savings of some market participants not being spent through the banking system.

In the five months to May exports rose 15.7 percent to 4.4 billion US dollars and imports fell 1.5 percent to 7,467.9 million US dollars.

The trade deficit was down 19.3 percent to 3,014.7 million US dollars.

Sri Lanka has a trade deficit because domestic agents spend dollars flowing from outside the merchandise trade account especially such as from remittances (exports of labour) and borrowings (exports of debt).

The central bank said worker remittances rose 10.5 percent to 2

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