Sri Lanka’s trade deficit narrows in October 2021 with above US$ 1.0 billion of export earnings
Tue, Dec 21, 2021, 01:02 am SL Time, ColomboPage News Desk, Sri Lanka.
Dec 21, Colombo: Sri Lanka’s trade deficit further narrowed in October 2021 as the earnings from exports recorded the highest monthly export value in history for a fifth consecutive month of above US dollars 1.0 billion of export earnings in 2021, the Central Bank reported Monday in its External Sector Performance review for the month.
Merchandise trade deficit narrowed to US dollars 495 million in October 2021, compared to US dollars 509 million in October 2020.
However, the cumulative deficit in the trade account from January to October 2021 widened to US$ 6.498 billion from US$ 4.846 billion in the corresponding period of 2020. The major factors that contributed to the widening of the trade deficit are increase in imports of fuel, textiles and machinery & equipment.
Earnings from exports in October 2021 grew by 40.4 percent over October 2020 to reach US$ 1.2 billion. An increase in earnings was observed in agricultural and industrial exports, while a marginal decline was recorded in mineral exports.
Earnings from the export of industrial goods increased by 49.3 per cent in October 2021 to US$ 954 million, compared to US$ 639.1 million in October 2020.
Total earnings from the export of agricultural goods in October 2021 increased by 14.3 percent to US$ 241.6 million, compared to October 2020, mainly due to the decrease in export earnings from spices, seafood, coconut and minor agricultural products.
However, earnings from tea exports decreased by 2.4 percent (y-o-y), due to lower export prices (by 7.3 per cent) in October 2021.
Cumulative export earnings increased by 22.1 percent during January-October 2021, amounting to US$ 10.134 billion, compared to US$ 8.299 billion recorded in the corresponding period in 2020.
Expenditure on merchandise imports in October 2021 increased by 24.3 percent to US$ 1.694 billion, compared to US$ 1.363 billion recorded in October 2020.
An increase in import expenditure was observed in intermediate goods and investment goods, while a decline was observed in consumer goods.
Cumulatively, in the first ten months of 2021 import expenditure increased by 26.5 percent to US$ 16.632 billion compared to US$ 13.145 billion for the same period in 2020.
Earnings from tourism, which are estimated based on tourist arrivals, are estimated at US$ 18 million in October 2021. Cumulative earnings from tourism are estimated at US$ 51 million during the ten months up to October 2021, compared to US$ 682 million recorded during the same period in 2020.
Workers’ remittances decreased by 49.7 percent in October 2021, year-on-year, to US$ 317 million. Workers’ remittances during the first ten months of the year declined by 13.8 percent, year-on-year, to US$ 4.895 billion.
Cumulative net outflows from the government securities market during the ten months up to October 2021 amounted to US$ 28 million.
Gross official reserves stood at US dollars 2.3 billion at end October 2021 not including the bilateral currency swap arrangement amounting to CNY 10 billion (approximately US dollars 1.5 billion) between the People’s Bank of China and the Central Bank of Sri Lanka.
During the year up to 20 December 2021, the Sri Lanka rupee recorded a depreciation of 8.2 percent against the US dollar.