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Sri Lanka's trade deficit expands 8.4% in November 2017 despite double-digit growth in exports earnings

Wednesday, January 31, 2018 > 09:40:21

Colombo Page

Despite a double-digit growth in exports earnings continued for a fifth consecutive month, Sri Lanka's trade deficit widened 8.4 percent to US$ 999.5 million in November 2017 from US$ 922.4 million a year earlier, according to the Central Bank data released in its External Sector Performance Review on Tuesday.

On a cumulative basis, in the first eleven months of 2017, the trade deficit widened by 8.5 percent to US$ 8.59 billion from US$ 7.92 billion recorded during the same period of 2016.

This was mainly due to the higher import expenditure on account of increased expenses on fuel imports, the Central Bank said.

Earnings from exports increased by 16.2 percent in November 2017 to US$ 940.9 million from US$ 809.7 million earned in November last year. Earnings from textiles and garments exports contributed largely for this growth.

Export earnings from garments increased for the fifth consecutive month in November 2017 with increased demand from the EU and the USA and non-traditional markets such as Australia, Hong Kong and UAE, according to the Central Bank.

On a cumulative basis, exports earnings during the first eleven months of 2017 grew by 9.4 percent (year-on-year) to US$ 10.34 billion, with higher earnings from tea, rubber, garments, seafood exports, spices, and petroleum products.

However, expenditure on imports also increased significantly by 12.0 percent (year-on-year) to US$ 1.94 billion in November 2017 from US$ 1.73 billion a year ago, particularly due to expenditure incurred for fuel imports as a result of significant increase in crude oil and refined petroleum products on account of the combined effect of higher prices in the international market and increased import volumes.

On a cumulative basis, expenditure on imports during the first eleven months of 2017 grew by 9.0 percent (year-on-year) to US$ 18.93 billion from US$ 17.36 billion, largely due to higher imports of fuel, gold and rice.

In November 2017, earnings from tourism recorded a decline in comparison to November 2016 owing to the drop in number of tourist arrivals during the month.

Earnings from tourism marginally increased by 0.2 percent to US$ 287 million in November 2017 while on a cumulative basis, earnings from tourism increased by 2.5 percent to US$ 3.21 billion during the first eleven months of 2017.

Workers' remittances declined by 0.9 percent to US$ 562 million in November 2017 from US$ 567 million a year earlier. The cumulative inflow from workers' remittances declined by 7.3 percent to US$ 6.08 billion during the first eleven months of 2017, relative to the corresponding period of 2016.

Despite the slower than expected improvement in the current account, the financial account of the BOP was strengthened during the month of November with continuous foreign inflows. The overall BOP During the first eleven months of 2017 is estimated to have recorded a surplus of US$ 2.0 billion.

Continuing the positive trend recorded since March 2017, foreign investments to the government securities market witnessed net inflows for the ninth consecutive month.

Sri Lanka's gross official reserves, as at end November 2017, rose to US$ 7.3 billion, equivalent to 4.2 months of imports, while total foreign assets amounted to US$ 9.7 billion, equivalent to 5.6 months of imports.

The rupee recorded a depreciation of 0.6 percent against the US dollar in 2018, up to 29 January, in comparison to the depreciation of 2.0 percent recorded during 2017.

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