Trade deficit widens in July as exports fall 7%

• July deficit widens to US $ 717mn, from US $ 316mn a month ago and US $ 681mn a year ago
• Cumulative trade deficit for first 7 months narrows to US $ 4.3bn, from US $ 6.4bn  
• Imports in July down 2.2% to US $ 1.7bn as vehicle imports fell 30% to US $ 95.4mn

Sri Lanka’s trade deficit, which has been contracting since November, last year, expanded in the month of July as exports fell more than the decline in imports, after a steady growth for several months, the data released by the Central Bank showed.

Exports in July fell 7 percent year-on-year (YoY) to US $ 999 million, amid the lower prices of bunker fuel and the export of a naval craft in July 2018, which resulted in a higher export base in the corresponding period, the Central Bank said.

The July trade deficit widened to US $ 717 million, compared to US $ 316 million a month ago and the US $ 681 million deficit recorded a year ago.
The cumulative trade deficit for the January-July period however narrowed to US $ 4.3 billion, from US $ 6.4 billion reported for the same 
period, last year. 

Earnings from industrial exports fell 6.4 percent YoY to US $ 789.5 million, of which textile and garment exports consisted of US $ 475.6 million, 
up 2.1 percent YoY.

Rubber products exports, mainly consisting of tyres, fell 1.4 percent YoY to US $ 76.3 million, while export of petroleum products by way of supplying bunker services fell 37.5 percent YoY to US $ 43 million.

Agricultural exports in July fell 9.1 percent YoY to US $ 205.1 million, as tea exports fell 11.1 percent YoY to US $ 125.2 million.

Spice exports during the month fell 22.8 percent YoY to US $ 26.5 million, while seafood exports rose 13.1 percent YoY to US $ 20.4 million. 

On a cumulative basis, exports rose 2.8 percent YoY to US $ 7 billion in the first seven months of the year.

Meanwhile, merchandise imports in the month of July fell 2.2 percent YoY to US $ 1,715.9 million, amid a 8.6 percent YoY to US $ 356 million decline in consumer goods imports.
This was helped by a 30.4 percent YoY decline to US $ 95.4 million in personal vehicle imports. Vehicle imports in the first seven months of the year have declined 55.8 percent YoY to US $ 419.6 million. 

Intermediate goods imports fell only marginally by 0.6 percent YoY to US $ 969.6 million, as the July fuel bill rose 13.8 percent YoY to US $ 314.7 million, amid higher crude oil imports.
Import of textile and textile articles edged down 0.4 percent YoY to US $ 248.6 million, while base metal imports slumped 48.7 percent YoY to US $ 47.1 million.
Investment goods imports increased 0.9 percent YoY to US $ 389.9 million in July, as building material imports rose 24.4 percent YoY to US $ 148.8 million. 
On a cumulative basis, imports fell 14.3 percent YoY to US $ 11.3 billion in the first seven months of the year.

In terms of other major inflows to the current account, earnings from tourism were estimated at US $ 217 million in July, compared to US $ 409 million in July 2018. In cumulative terms, earnings from tourism were estimated at US $ 2,110 million during the first seven months of 2019, compared to US $ 2,595 million during the corresponding period of 2018. 
Meanwhile, workers’ remittances grew by one percent YoY to US $ 626 million in July 2019. On a cumulative basis, workers’ remittances declined by 8.2 percent to US $ 3,895 million during the first seven months of 2019, in comparison to the corresponding period of 2018.

Meanwhile, foreign inflows to the Colombo Stock Exchange showed a notable inflow, as the CSE recorded an inflow of US $ 44 million during July and a net inflow of US $ 34 million in the first seven months of the year.

Foreign investments in government securities recorded a net outflow of US $ 33 million in July 2019. On a cumulative basis, net outflows from the government securities market amounted to US $ 129 million during the first seven months of the year.