Sri Lanka trade deficit expands over USD1bn in January; imports USD2bn

Apr 09, 2018 (LBO) – Sri Lanka’s trade deficit has expanded in January surpassing 1 billion US dollars for the second consecutive month due to significant level of imports offsetting the increase in export earnings.

While earnings from merchandise exports increased, expenditure on imports also increased significantly outweighing the performance in export earnings during the month.

Import expenditure surpassed the 2 billion dollar mark in January for the second consecutive month mainly due to high import bills incurred on fuel.

Despite the reduction in the volume of refined petroleum imports, expenditure on fuel imports increased significantly during the month owing to high volumes of crude oil imports and significant price increases recorded in all categories of fuel.

The average import price of crude oil increased to 72.04 dollars per barrel in January 2018 from 57.39 dollars per barrel in January 2017.

Earnings from exports continued to record double-digit growth on year-on-year basis reaching 965 million dollars in January, partly driven by the impact of the low base as export earnings contracted by 3.8 percent in January 2017.

Sri Lanka’s external sector demonstrated an improvement in January 2018 with higher inflows to the financial account in spite of the widening of the trade deficit.

On the other hand, reversing the moderating trend observed during the last year, tourist earnings recorded a notable growth during January 2018.

Workers’ remittances, which marked a set-back in 2017, also recorded a growth on a year-on-year basis in January 2018.

Financial account of the Balance of Payments continued to experience higher inflows in January 2018, with foreign investments in the government securities market and the CSE.