Sri Lanka’s external sector continued to improve with increased exports and inflows to the financial account.
However, the trade deficit widened in July 2017 compared to the corresponding month of 2016 due to higher import expenditure amid the increase in export earnings. Tourist earnings declined marginally in July while workers’ remittances increased, reversing its declining trend observed in the last four months.
Inflows to the financial account continued to strengthen with net inflows to the government securities market, long term loans to the government, receipt of the third tranche of the Extended Fund Facility (EFF) of the International Monetary Fund (IMF), as well as continued portfolio investment inflows to the Colombo Stock Exchange (CSE).
Continuing the upward trend observed since March 2017, earnings from exports increased in July 2017 surpassing the US $ 1 billion mark for the second time during the year. Accordingly, earnings from exports at US dollars 1,016 million in July 2017 registered a year-on-year growth of 13.9%.
Earnings from industrial exports grew by 11.6% (year-on-year) to US $ 757 million in July 2017, led by increased exports of textiles and garments. Indicating a reversal of negative growth experienced in the previous two months, export earnings from textiles and garments increased by 9.6% (year-on-year) to US $ 467 million compared to July 2016, registering the highest monthly value recorded so far during the year. Garment exports to the EU market increased by 10.6 per cent (year-on-year) to US dollars 188 million in July 2017 signaling the positive impact of the restoration of the GSP+ facility in May 2017. During the month, garment exports to the USA and non-traditional markets also grew by 7.9% and 6.5% (year-on-year), respectively. Meanwhile, export earnings from food, beverages and tobacco increased significantly by 46.8 %( year-on-year) to US $ 34 million.
Earnings from agricultural exports increased substantially by 21.8% (year-on-year) to US$ 253 million in July 2017 mainly due to notable performance recorded in tea exports.
In addition, earnings from seafood exports increased considerably by 42.5 per cent (year-on-year) to US dollars 20 million in July. Meanwhile, export earnings from spices increased by 14.0 per cent (year-on-year) during the month, reflecting higher volumes in almost all sub categories.
On a cumulative basis, earnings from exports grew by 6.5 per cent (year-on-year) to US dollars 6,413 million during the first seven months of 2017 due to increased earnings received from exports of tea, transport equipment, petroleum products, spices and seafood.
During the first seven month of 2017, the USA, the UK, India, Germany and Italy were the leading markets for merchandise exports of Sri Lanka accounting for about 50 per cent of total exports.
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