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Sri Lanka’s trade balance expands 7.8% in April 2017 despite increase in exports earnings

Sri Lanka’s trade balance expands 7.8% in April 2017 despite increase in exports earnings

COLOMBO: Despite an increase in exports earnings Sri Lanka’s trade deficit widened 7.8 percent to US$ 809.2 million in April 2017 from US$ 750.5 million a year earlier, according to the Central Bank data released in its External Sector Performance Review on Friday. On a cumulative basis, in the first four months of 2017, the trade deficit increased by 27.2 percent to US$ 3.314 billion from US$ 2.605 billion recorded during the same period of 2016. Earnings from exports increased for the second consecutive month to US$ 794.7 million in April 2017 registering a year-on-year growth of 11.9 percent.

On a cumulative basis, exports earnings during the first four months of 2017 at US$ 3.569 billion, grew by 3.5 percent (year-on-year) with higher earnings from tea, spices, machinery and mechanical appliances, petroleum products and seafood exports. However, expenditure on imports also increased by 9.8 percent (year-on-year) to US$ 1.604 billion in April 2017. On a cumulative basis, import expenditure at US$ 6.883 billion during the first four months of 2017 increased by 13.7 percent, largely due to increased imports of fuel, gold and rice.

Tourist arrivals in April 2017 increased by 17.5 percent, following a decline in arrivals for two consecutive months. Accordingly, earnings from tourism increased to US$ 274.9 million during April 2017 in comparison to US$ 234.0 million in April 2016. Cumulative earnings from tourism increased by 6.1 percent to US$ 1.313 billion during the first four months of 2017. Workers remittances declined by 15.6 percent to US$ 487.9 million in April 2017 from US$ 578.0 million in April 2016. The cumulative inflow from workers’ remittances also declined by 6.3 percent to US$ 2,221.7 million during the first four months of 2017, relative to the corresponding period of 2016.

Foreign investments in the Colombo Stock Exchange during the first four months of the year recorded a net inflow of US$ 154.5 million. During the first four months of 2017, the overall BOP is estimated to have recorded a deficit of US$ 344.4 million in comparison to a deficit of US$ 958.1 million recorded during the corresponding period of 2016. Sri Lanka’s gross official reserves, as at end April 2017, amounted to US$ 5.0 billion, equivalent to 3.0 months of imports, while total foreign assets amounted to US$ 7.5 billion, equivalent to 4.5 months of imports. The rupee recorded a modest depreciation of 2.6 percent against the US dollar from end 2016 up to 06 July 2017.