Reversing the declining trend observed during the last two months, earnings from exports increased by 9.8 per cent (year-on-year) in March 2017. However, the trade deficit widened in March 2017 compared to the corresponding month of 2016 as the increase in export earnings was offset by the higher increase in import expenditure.
Tourist earnings declined in March 2017, as in the previous month, with the partial closure of the Bandaranaike International Airport (BIA) for resurfacing of the runway. Meanwhile, workers’ remittances also recorded a decline in March 2017.
In the financial account, foreign inflows to the Colombo Stock Exchange (CSE) continued to record a net inflow while a reversal of trend in net outflows by foreign investors was observed in the government securities market with marginal net inflows during the month.
Financial account of the Balance of Payments (BOP) further improved in subsequent months, with the continuation of the above inflows, and also as a result of the receipt of the proceeds of the International Sovereign Bond and the syndicated loan to the government, thus helping to stabilise the external sector.
Earnings from exports passed the US dollars 1 billion mark in March 2017 for the first time since March 2015, amounting to US dollars 1,042 million and registering a growth of 9.8 per cent (year-on-year). This increase was mainly led by agricultural exports followed by industrial exports.
Earnings from agricultural exports grew for the fourth consecutive month, registering an increase of 28.3 per cent, to US dollars 257 million in March 2017. Improved export performance recorded in tea, seafood, and spices contributed largely to the growth in agricultural exports.
Earnings from seafood exports increased by 75.2 per cent, year-on-year, in March 2017 reflecting a substantial increase in seafood exports to the EU market, following the removal of the fisheries ban.
Earnings from industrial exports, which represent about 75 per cent of total exports, grew by 4.7 per cent, year-on-year, to US dollars 779 million in March 2017 led by higher earnings from textile and garment exports.
Despite the year-on-year decline recorded during the previous two months, export earnings from textiles and garments increased by 2.6 per cent to US dollars 453 million in March 2017, reflecting increased demand from the EU market.
Earnings from exports passed the US dollars 1 billion mark in March 2017 for the first time since March 2015, amounting to US dollars 1,042 million and registering a growth of 9.8 per cent (year-on-year). This increase was mainly led by agricultural exports followed by industrial exports.
Expenditure on imports increased by 19.4per cent(year-on-year) to US dollars 1,869million in March2017.This was the highest import growth (year-on-year) recorded during a month, since October 2014. The largest contribution (76.9 per cent) to the overall growth was from intermediate goods, followed by consumer goods (15.9 per cent) and investment goods (6.4 per cent).
Sri Lanka’s gross official reserves, as at end March 2017, amounted to US dollars 5.1 billion, equivalent to 3.1 months of imports, while total foreign assets amounted to US dollars 7.1 billion, equivalent to 4.2 months of imports.
The rupee recorded a modest depreciation of 1.8 per cent against the US dollar during the period from end 2016 to 5 June 2017. Furthermore, reflecting the cross currency movements, the rupee also depreciated against the euro by 8.1 per cent, the pound sterling by 6.2 per cent, the Japanese yen by 6.7 per cent, the Canadian dollar by 1.6 per cent, the Australian dollar by 4.6 per cent and the Indian rupee by 6.8 per cent during this period.
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