By:Staff WriterColombo (LNW): Sri Lanka continues to sustain a near US $ 1 billion trade deficit as evidenced by August external trade data released recently.
By end July cumulative trade deficit was $ 971 million whilst in August it amounted $ 925 million. In the first eight months of this year.
The cumulative deficit in the trade account narrowed to $2,964 million from $3,889 million recorded over the same period in 2022, due to a larger decline in imports offsetting the decline in exports, the Central Bank said.
In recent months however, the difference in the deficit has narrowed. In the first quarter of this year the deficit was better at $ 861 million, low er by $ 1.5 billion from $ 2.4 billion in the 1Q of last year.
In the first half the deficit was $ 2.28 billion, less than $ 1.2 billion as against $ 3.5 billion a year ago.
However in August the deficit in the merchandise trade account widened to $ 307 million, compared to $ 260 million recorded a year ago.
Overall exports: Earnings from exports in August 2023 marked the highest monthly earnings so far in 2023.
However, earnings from merchandise exports declined by 8.7% in August 2023, YoY, to $ 1,119 million.
The decline in export earnings was mainly driven by industrial exports, particularly garments, due to a continued slowdown in external demand.
Cumulative export earnings during January to August 2023 also declined by 10.1% over the same period in the last year, amounting to $ 8,010 million.
Industrial exports: Earnings from the export of industrial goods continued to witness a decline in August 2023 as well, compared to a year earlier, and a significant share of this decrease can be attributed to garments, which offset the increase recorded in export of transport equipment.
The export of garments recorded a 20% decline during the eight months ending August 2023, recording a decline in earnings from most of the major markets (the USA, the EU and the UK).
Moreover, there was a substantial downturn in the export of rubber products (mainly, tires and gloves); and animal fodder (mainly, wheat residues); among others.
Expenditure on merchandise imports declined by 4.0% (YoY) to $ 1,426 million in August 2023.
However, a marginal increase in import expenditure is observed from June 2023 onwards, on a month-on-month basis, partly supported by the relaxations of import restrictions.
The decline in import expenditure was primarily driven by intermediate goods, despite expenditures on consumer goods and investment goods imports recorded an increase.
Cumulative import expenditure during January to August 2023 declined by 14.3% to $ 10,974 million, compared to the same period in the previous year.