World Economy

Sri Lanka Trade Deficit Widens

Sri Lanka Trade Deficit WidensSri Lanka Trade Deficit Widens

Sri Lanka’s trade deficit widened substantially by 51.9% to $689.2 million in June from $453.7 million a year earlier, according to the Central Bank data released in its External Sector Performance Review Friday.

On a cumulative basis, trade deficit during the first half of 2015 increased by 15.6% to $4.086 billion, Colombo online reported.

However, the country’s central bank said the wider trade deficit on a cumulative basis as at end June 2015 was offset to a greater extent by continued healthy inflows of workers’ remittances and earnings from tourism.

Earnings from exports declined 4.2% to $944.1 million in June 2015 year-on-year.

Despite the significant improvement in earnings from exports of transport equipment, petroleum products and spices, lower earnings from tea, textiles and garments, rubber products and seafood exports contributed to this decline.

Earnings from industrial exports declined by 1.6% to $713.8 million in the month while agricultural exports decreased by 4.9% registering $424.3 million.

In the first six months of the year exports income declined marginally by 0.6% to $5.42 billion.

Total import expenditure in June 2015 increased for the third consecutive month recording a significant increase of 13.5%, year-on-year, to $1.63 billion from $1.44 billion a year ago.

The major contribution to the increase in imports came from imports of vehicles. Meanwhile, import expenditure on fuel declined by 41.3%, year-on-year, to $242 million in June 2015.

On a cumulative basis, expenditure on imports during the first six months of 2015 increased by 5.7%, year-on-year, to $9.5 billion mainly led by consumer goods imports followed by investment goods imports.

Earnings from tourism are estimated to have increased by 31.2% to $279.9 million in July 2015. Consequently, the cumulative earnings from tourism increased by 16.8% to $1.6 billion during the first seven months of 2015.

In June 2015, workers’ remittances grew by 7.6%, year-on-year, to $629.6 million from $585.1 million in June 2014.

Foreign investments in the government securities market recorded a net outflow of $424.7 million during the first six months of 2015 compared to a net inflow of $231.8 million during the corresponding period of 2014.

The overall BOP is estimated to have recorded a deficit of $791.7 million during the first six months of 2015, compared to a surplus of $1.95 billion recorded during the corresponding period of 2014.

As at end June 2015, Sri Lanka’s gross official reserves stood at $7.5 billion while total foreign assets amounted to $9.2 billion.