Apr 09, Colombo: Despite a double-digit growth in exports, Sri Lanka's trade deficit widened to exceed US$ 1 billion mark in January 2018 for the second consecutive month due to significant level of imports offsetting the increase in export earnings, according to the Central Bank data released in its External Sector Performance Review for the month.
The external sector demonstrated an improvement in January 2018 with higher inflows to the financial account in spite of the widening of the trade deficit, the Bank said.
The trade deficit widened 12.3 percent to US$ 1.049 billion in January 2018 from US$ 934 million a year earlier.
Earnings from exports increased by 11.6 percent in January 2018 to US$ 965 million from US$ 865 million earned in January last year. Export earnings from food, beverages and tobacco, petroleum products, rubber products and tea contributed largely to the growth in exports.
However, expenditure on imports also increased significantly by 12.0 percent (year-on-year) to US$ 2.014 billion in January 2018 from US$ 1.8 billion a year ago, particularly due to expenditure incurred for high volumes of crude oil imports and significant price increases recorded in all categories of fuel.
In January 2018, tourist arrivals increased notably by 8.9 percent recording the second highest number of arrivals in a given month with earnings from tourism increased, year-on-year, to US$ 443 million.
Workers' remittances grew by 8.8 percent, year-on-year, to US$ 729 million in January 2018 compared to US$ 670 million in January 2017.
Foreign investments in the government securities market witnessed a net inflow for the eleventh consecutive month in January 2018 in comparison to the net outflow recorded in January 2017.
The gross official reserves of the country declined to US$ 7.7 billion, equivalent to 4.3 months of imports, at end January 2018 compared to US$ 8.0 billion at end 2017, primarily due to a periodic payment for the obligations at the Asian Clearing Union (ACU) during the month.
The Sri Lankan rupee depreciated by 2.0 percent against the US dollar up to 5 April 2018.