Sri Lanka’s Export Revenue Tops US$10 Billion Despite Mounting External Sector Pressures
August 01, Colombo (LNW): Sri Lanka generated more than US$10 billion in export earnings during the first six months of 2026, marking another milestone for the country’s external trade, although rising import costs continued to weigh heavily on the balance of payments, according to the Central Bank’s latest External Sector Performance report.
Total export income reached US$10.4 billion between January and June, representing a 3.3 per cent increase compared with the same period last year. The improvement was driven primarily by merchandise exports, which climbed 6.3 per cent to US$6.9 billion, offsetting a decline in earnings from service exports.
However, stronger export performance was overshadowed by a sharp rise in imports. The merchandise trade deficit widened significantly to US$5.5 billion, up from US$3.3 billion a year earlier, as expenditure on imported goods increased at a faster pace than export growth.
The Central Bank also reported that the country’s external current account recorded a US$245 million deficit during the first half of the year, reversing the surplus recorded during the corresponding period in 2025. June alone posted a deficit of US$149 million, making it the third consecutive month in negative territory.
Higher fuel prices and increased import volumes continued to exert pressure on the external sector. Expenditure on petroleum imports surged 58.8 per cent year-on-year to approximately US$3.17 billion, while spending on imported motor vehicles totalled US$1.25 billion during the six-month period.
Despite these challenges, workers’ remittances remained one of the economy’s strongest sources of foreign exchange. Inflows rose 23.2 per cent from a year earlier to US$4.6 billion, with June alone contributing US$695 million, reflecting continued resilience among overseas Sri Lankan workers.
The tourism industry, meanwhile, faced headwinds amid instability in the Middle East. Visitor arrivals slipped slightly to 1.15 million during the first half of 2026 compared with the same period last year, while tourism earnings fell 11.8 per cent to US$1.51 billion. Revenue generated in June also declined by 10.8 per cent year-on-year.
On the reserve front, the Central Bank said Sri Lanka’s gross official reserves stood at US$6.5 billion at the end of June, a figure that includes the currency swap facility with the People’s Bank of China. The reserve position was maintained despite continued external debt servicing obligations.
The report further noted that the Sri Lankan rupee had depreciated by 7.8 per cent against the US dollar by the end of July. Although geopolitical tensions linked to the conflict in the Middle East continued to place pressure on the currency, the Central Bank observed that the pace of depreciation had eased in recent weeks, suggesting a degree of stability is gradually returning to the foreign exchange market.
Overall, the latest figures point to an economy that continues to benefit from stronger exports and remittance inflows, while still facing considerable challenges from elevated import expenditure, external uncertainties and ongoing pressure on the country’s balance of payments.
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