March trade deficit picks up to US $ 412mn, from US $ 39mn in February
Sri Lanka’s imports showed recovery in March, on the back of the seasonal demand as well as the return of economic stability, though fragile may be, after a year of turmoil caused by the shortage of foreign exchange last year.
Imports increased from US $ 1,021 million in February to US $ 1,450 million in March but still remain below US $ 1,819 million in the same month in 2022, when the persistently high imports alongside the thin inflows of foreign exchange brought the economy into a grinding halt.
The rising imports signal the pick-up in economic activity after a year of an unprecedented crisis.
The March import bill was pushed up, mainly by the fuel imports, which rose by as much as 90 percent to US $ 391.0 million, from US $ 204.3 million
Meanwhile, exports picked up slightly above a billion dollars to US $ 1,037.5 million in March, for the first time this year, from US $ 982.0 million in February. March exports remained slightly below US $ 1,058.2 million in the same month in 2022. Merchandise exports have softened since the final quarter last year, mainly due to the global economic slowdown caused by the rise in interest rates to combat high inflation in the West.
Textiles and garment exports particularly have come down, due to the soft economic slowdown in the US, UK and Europe.
Such exports fell by 10.2 percent to US $ 417.2 million in March while the cumulative export income from the industry declined by 13.8 percent in the three months to US $ 1,273.0 million over the same period in 2022.
As a result of the combination of rising imports and softening in exports, the trade deficit expanded in March to US $ 412 million, from US $ 39 million in February.
However, the March trade deficit still remains below US $ 761 million in the same month in 2022.
“The trade deficit in March 2023 widened significantly, compared to February 2023, reflecting the increase in imports, due to seasonal demand,” the Central Bank said.
The cumulative three-month deficit rose to US $ 861 million, compared to US $ 2,397 million in the same period in 2022.
Sri Lanka’s external sector is seen gradually regaining its strength amid the narrow current account deficit, suspension of external debt payments and increased inflows from multilateral agencies.