SL’s trade deficit widens in September after lifting import ban
By: Staff Writer
Colombo (LNW): Sri Lanka’s trade deficit began widening in September following the relaxation of import barriers and this trend will continue for four years including 2023, the Central Bank claims.
Many of Sri Lanka’s trading partners including the European Union have raised concerns over import bans while the International Monetary Fund (IMF) also has urged the authorities to relax such barriers.
The Central Bank anticipated the widening of the trade deficit will start once they relax the compressed import ban.
True to their prediction the deficit in the merchandise trade account widened to US $ 378 million in September 2023, compared to the deficit of $ 205 million recorded in September 2022, Central Bank announced.
Meanwhile, the cumulative deficit in the trade account during January to September 2023 narrowed to $3,342 million from $ 4,093 million recorded over the same period in 2022.
Earnings from merchandise exports declined by 10 per cent to $ 972 million in September 2023, over the corresponding month in 2022 as well as compared to $ 1,119 million recorded in August 2023.
Despite the increase in agricultural exports, the decline in earnings from industrial exports associated with slowing external demand, including garments, mainly contributed to this contraction in export earnings in September 2023, compared to a year earlier, CB disclosed.
Cumulative export earnings also declined by 10.1 per cent during January to September 2023 to $ 8,982 million, over the same period in the last year.
Expenditure on merchandise imports increased by 5.1 per cent (year-on-year) to $ 1,349 million in September 2023, compared to a significantly low base of $ 1,284 million in September 2022, though it declined from$,426 million recorded in August 2023.
The increase in import expenditure was broad-based and mainly contributed by investment goods.
Meanwhile, cumulative import expenditure during January to September 2023 declined by 12.5 percent $12,323 million over the corresponding period in the last year.
Expenditure on the importation of consumer goods increased in September 2023, compared to a year ago, due to the increase in expenditure on non-food consumer goods although food and beverages imports recorded a decline.
The increase in expenditure on non-food consumer goods was broad-based, with a notable increase in imports of household and furniture items (primarily, textile articles, and tableware and kitchenware), telecommunication devices (primarily, mobile telephones), and clothing and accessories.
In contrast, expenditure on food and beverages declined due to the lower import volumes of cereals and milling industry products (mainly, rice) in September 2023.
Expenditure on the importation of intermediate goods increased marginally in September 2023, compared to a year ago, mainly driven by the higher import volumes of wheat, fuel, fertiliser (mainly, urea), and base metals (mainly, Iron and steel). Despite non-importation of crude oil in September 2023.
Expenditure on fuel increased compared to September 2022, with higher imports of refined petroleum and the resumption of coal imports.
However, the importation of textiles and textile articles (primarily, fabrics); plastics and articles thereof; rubber and articles recorded notable declines, among others, in September 2023, compared to September 2022.