March 27, 2019

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    Earnings from merchandise exports UP to US$ 924 mn in May

    July 23, 2018

    Sri Lanka’s external sector demonstrated a modest performance in May 2018. The deficit in the trade account continued to expand at a comparatively slower rate in May 2018, as export growth outpaced import growth.

    Tourist earnings continued to increase while workers’ remittances declined during the month. Inflows to the financial account of the balance of payments (BOP) moderated with net outflows from the government securities market and a reduction in net inflows to the Colombo Stock Exchange (CSE). The country’s level of gross official reserves at the end May 2018, stood at US dollars 8.8 billion.

    Meanwhile, reflecting the developments in the domestic and global foreign exchange markets, the Sri Lankan rupee depreciated by 3.3 per cent against the US dollar by end May 2018 and by 4.5 per cent so far during the year up to 20 July 2018. Earnings from merchandise exports increased to US dollars 924 million in May 2018 mainly driven by industrial exports, despite a reduction recorded in agricultural exports.

    However, earnings from agricultural exports declined in May 2018 due to poor performance in almost all categories except spice and seafood exports. Benefiting from the positive impact of the removal of the ban on fisheries exports to the EU and the restoration of GSP+ facility, earnings from seafood exports increased significantly during the month due to higher prices and volumes of seafood exported.

    However, export earnings from tea declined due to the reduction recorded in both volumes and prices of tea exported. In May 2018, tourist arrivals increased by 6.2 per cent to 129,466 while earnings from tourism increased, year-on-year, to US dollars 240 million in May 2018.

    Meanwhile, reversing the positive development observed in the last two months, workers’ remittances declined by 3.4 per cent, year-on-year, to US dollars 580 million in May 2018 compared to US dollars 601 million in May 2017.

    Foreign investment in the government securities market witnessed a net outflow of US dollars 89 million in May 2018, with a cumulative net outflow of US dollars 102 million during the first five months of 2018.Foreign investments in the CSE including primary and secondary market flows recorded a net inflow of US dollars 5 million in May 2018 with a cumulative net inflow of US dollars 53 million during January-May 2018. Long term loans to the government recorded a net outflow of US dollars 325 million and US dollars 231 million during May 2018 and first five months of the year, respectively.

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