Sri Lanka’s trade deficit narrows in September 2021

Sri Lanka’s trade deficit narrows in September 2021

Mon, Nov 15, 2021, 11:28 pm SL Time, ColomboPage News Desk, Sri Lanka.

Nov 15, Colombo: Sri Lanka’s trade deficit narrowed in September 2021 as the earnings from exports continued to record values over US$ 1.0 billion for the fourth consecutive month in 2021 while import expenditure remained at almost the same level as in September 2020 the Central Bank reported Monday in its External Sector Performance review for the month.

Merchandise trade deficit narrowed to US dollars 495 million in September 2021, compared to US dollars 525 million in September 2020.

However, the cumulative deficit in the trade account from January to September 2021 widened to US$ 6.003 billion from US$ 4.337 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 September 2021 grew by 3.1 percent over September 2020 to reach US$ 1.031 billion. An increase in earnings was observed in industrial and mineral exports, while a decline was recorded in agricultural exports.

Earnings from the export of industrial goods increased by 4.0 per cent in September 2021 to US$ 805.7 million, compared to US$ 774.6 million in September 2020.

Total earnings from the export of agricultural goods in September 2021 declined by 0.6 percent to US$ 221.2 million, compared to September 2020, mainly due to the decrease in export earnings from tea, unmanufactured tobacco, spices, and vegetables.

Cumulative export earnings increased by 20.0 percent during January-September 2021, amounting to US$ 8.934 billion, compared to US$ 7.445 billion recorded in the corresponding period in 2020.

Expenditure on merchandise imports in September 2021 amounted to US$ 1.526 billion, around the same level recorded in September 2020. An increase in import expenditure was observed in consumer goods, while a decline was recorded in intermediate goods, and investment goods.

Cumulatively, in the first nine months of 2021 import expenditure increased by 26.8 percent to US$ 14.938 billion compared to US$ 11.782 billion for the same period in 2020.

Earnings from tourism, which are estimated based on tourist arrivals, are estimated at US$ 18 million in September 2021. Cumulative earnings from tourism are estimated at US$ 51 million during the nine months up to September 2021, compared to US$ 682 million recorded during the same period in 2020.

Workers’ remittances decreased by 49.7 percent in September 2021, year-on-year, to US$ 353 million. Workers’ remittances during the first nine months of the year declined by 9.3 percent, year-on-year, to US$ 4.577 billion.

Cumulative net outflows from the government securities market during the nine months up to September 2021 amounted to US$ 27 million.

Gross official reserves stood at US dollars 2.7 billion at end September 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 (PBoC) and the Central Bank of Sri Lanka.

The Sri Lanka rupee appreciated by 5.0 per cent against the US dollar during September 2021. During the year up to 15 November 2021, the rupee recorded a depreciation of 7.7 per cent against the US dollar.

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