June 18, Colombo: Sri Lanka's external sector remained relatively stable in April 2019 as the year-on-year trade deficit continued to narrow significantly in April 2019, the Central Bank reported in its External Sector Performance review for the month.
In April 2019, the deficit in the trade account narrowed to US$ 797 million, compared to US$ 999 million in April 2018.
The considerable reduction in the trade deficit in April 2019 was attributed to a notable decline in year-on-year (YOY) import expenditure by 11 percent and marginal increase in export income.
Earnings from merchandise exports grew marginally by 0.4 percent in April 2019 to US$ 798 million compared with US$ 795 million in April 2018. The growth in exports was driven by the improved performance in industrial and mineral exports while agricultural exports declined.
Expenditure on imports declined in April 2019 for the sixth consecutive month by 11 percent to US$ 1.596 billion from US$ 1.794 billion a year ago.
During the first four months of 2019, the cumulative deficit in the trade account contracted to US$ 2.458 billion from US$ 3.981 billion recorded in the corresponding period of 2018, as YOY export earnings increased by 4.5 percent while import expenditure declined by 17.4 percent.
Earnings from tourism in April declined by 7.5 percent to US$ 313 million, while during the first four months of 2019 tourism earnings grew by 2.2 percent to US$ 1.704 billion over the corresponding period of 2018. Earnings from tourism declined due to a drop in tourist arrivals following the Easter Sunday attacks on April 21.
Workers' remittances increased by 2.3 percent, year-on-year, to US$ 554 million in April 2019. On a cumulative basis, workers' remittances declined by 13.8 percent to US$ 2.171 billion during the four months of 2019.
Foreign investments to the government securities market recorded a net outflow of US$ 79 million in April 2019. On a cumulative basis, net outflows to the government securities market amounted to US$ 27 million during the first four months of the year.
The Sri Lankan rupee appreciated by 3.3 percent against the US dollar during the year up to 18 June 2019.
The country's gross official reserves stood at US$ 7.2 billion, which was equivalent to 4.1 months of imports at end April 2019.