Sri Lanka’s external sector showed a mixed performance in March 2021 with a widened trade deficit on the one hand, and a healthy growth in workers’ remittances and a slight pickup in the tourism sector on the other.
The deficit in the trade account widened in March 2021, for the first time since April 2020. Both exports and imports were significantly higher in March 2021, compared to March 2020 as well as February 2021.
However, workers’ remittances grew steadily, and the tourism sector continued the recovery process, albeit at a very slow pace.
In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) continued to record marginal net outflows in March 2021 as well.
The exchange rate came under severe pressure during March 2021, partly reflecting the seasonal demand for imports. Accordingly, the Sri Lankan rupee depreciated by 2.5 per cent against the US dollar during the month of March.
Overall, the rupee recorded a depreciation of 6.7 per cent against the US dollar in 2021 up to 18May 2021.
Meanwhile, in March 2021, the Central Bank entered into a bilateral currency swap arrangement with the People’s Bank of China (PBoC) for Chinese Yuan 10 billion (approximately US dollars 1.5 billion) with a view to promoting bilateral trade and direct investment for economic development of the two countries, and to be used for other purposes agreed upon by both parties.
The deficit in the trade account widened on a year-on-year basis in March 2021, for the first time since April 2020, to US dollars 832 million compared to the deficit of US dollars 549 million recorded in March 2020 and US dollars 572 million in February 2021. Both exports and imports were significantly higher in March 2021, compared to March 2020 and February 2021.
Earnings from merchandise exports in March 2021 increased by 66.7 percent to US dollars 1,094million. On a month-on-month basis, earnings from Industrial exports increased, except for the subsector of leather, travel goods, and footwear.
Export earnings from all subsectors related to agricultural goods increased in March 2021, compared to a year ago, as well as compared with February 2021.
Expenditure on the importation of consumer goods increased by 42.1 per cent in March 2021, compared to March2020, and by 39.2 per cent compared to February 2021,with increases in both food and beverages and non-food consumer goods imports.
The import volume index and unit value index increased by 40.6per cent and 13.6per cent, respectively, on a year-on-year basis, in March 2021. This indicates that the increase in import expenditure was attributable to the combined impact of both higher import volumes and prices.
0 comments: