Sri Lanka’s trade deficit in May widened to US$ 885.6 million 2017 from US$ 809.7 million a year ago as for the third consecutive month, exports growth was overshadowed by a higher import bill.
Export earnings grew 7.8 percent year-on-year (YoY) to US$ 841.2 million, boosted by agricultural exports, which grew 32 percent YoY to US$ 222.7 million. Tea exports were the main reason for this growth, increasing 45.9 percent YoY to US$ 131.6 million due to higher global prices and volume growth.
Industrial exports grew just 1.1 percent YoY to US$ 614.5 million as apparel exports fell 5.2 percent YoY to US$ 337.7 million due to lower demand from all major markets.
Rubber products and petroleum products, of which each exported approximately US$ 10 million more worth of products compared to a year ago, supported industrial exports in the face of the poor apparel export performance.
Imports for May increased 8.6 percent YoY to US$ 1.73 billion, driven by an increase in consumer goods imports, which increased 17.5 percent YoY to US$ 385.6 million.
Weather affected short-supply of rice in the domestic market, and high importation of sugar, of which global prices have been on the rise, along with increased spending on telecommunication devices were the main causes of growth in consumer goods imports. Intermediate goods imports increased 1.6 percent YoY to US$ 864.7 million, as import declines across most key products were absorbed by the increase in expenditure on fossil fuels, up 15.3 percent YoY to US$ 215.7 million, due to increases in crude prices, and higher reliance on thermal power. Investment goods imports increased 4.5 percent YoY to US$ 427.3 million due to importation of aircraft parts and other road transport equipment.
For the first 5 months of 2017, exports increased 4.3 percent YoY to US$ 4.41 billion, while imports increased 12.6 percent YoY to US$ 8.61 billion, resulting in a trade deficit of US$ 4.2 billion, which deteriorated from US$ 3.42 billion YoY.
Worker remittances down for third consecutive month
Worker remittances, which had given crucial support to Sri Lanka’s current account in the balance of payment in the past, continued the third month of decline in May, falling 3.7 percent YoY to US$ 575.4 million.
Adverse economic and geopolitical conditions prevailing in the Middle East was the reason cited by the Central Bank for this decline.
Worker remittance inflows for the first 5 months of 2017 fell 5.8 percent YoY to US$ 2.8 billion.
Earnings from tourism meanwhile was estimated to have grown 4.8 percent YoY to US$ 1.52 billion during the first 5 months of 2017, with the contributions in May falling 2.5 percent YoY to US$ 209.1 million.