Sri Lanka’s trade deficit narrowed 11.9 percent year -onyear (YoY) to US $ 552 million in February amid sharp decline in imports, which outpaced the fall in exports. Export earnings fell 1.7 percent YoY to US $ 888 million in February while expenditure on imports fell at a greater pace of 5.9 percent YoY to US $ 1, 439 million.
The fall in exports r e f l e c t e d t h e l o w e r commodity prices in the international market and the lower export earnings from bunkering operations, which fell 55.6 percent YoY US $ 18.5 million. However, earnings from textile and garment exports, which comprise of 52 percent of total exports, rose 10.3 percent YoY to US $ 463.1 million. Earnings from tea, rubber and spice exports in February fell but earnings from seafood exports showed a 32.2 percent YoY jump to US $ 14.7 million with the removal of the European Union (EU) fish ban on Sri Lanka. On a cumulative basis, earnings from exports declined 2 percent YoY to US $ 1,783 million during the first two months of 2016. The fall in import expenditure was triggered by the lower international crude oil prices.
Sri Lanka’s oil bill for February fell 43.7 percent YoY to US $ 148.8 million, despite the importation of higher volumes required for thermal power generation. Consumer goods imports fell 2 percent YoY to US $ 345.6 million. Vehicle imports rose 9.8 percent YoY to US $ 64.5 million.
The expenditure on investment goods rose 2 percent YoY to US $ 369.4 million amid a 21.2 percent YoY rise in machinery and equipment imports. On a cumulative basis, expenditure on imports during the first two months of 2016 decreased 5.7 percent YoY to US $ 3,028 million, driven by fuel imports. Meanwhile, higher tourism and remittance earnings helped the country to somewhat offset the slow growth in exports. The tourism earnings in February rose 19.4 percent YoY to US $ 327.7 million while for the first two months of the year the earnings increased 21.8 percent YoY to US $ 649.7 million. The workers’ remittances in February rose 8.3 percent YoY to US $ 554.2 million, which can be partially attributed to the lower base effect in February 2015. The cumulative earnings rose 8 percent YoY to US $ 1035.2 million. However, the inflows to the Colombo Stock Exchange (CSE) in February fell 67.7 percent YoY to US $ 8.8 million and on a cumulative basis the inflows fell 136.1 percent YoY to US $ 10.1 million. The inflows to the government also fell in February as well as cumulatively.