SL ends 2024 with $ 6 b trade deficit

• Imports rose by 12% to $ 18.84 b driven by growth in all major import categories
• Earnings from merchandise exports up 7 % to $ 12.7 b – second highest in history

The country has ended 2024 with a cumulative deficit in the trade account in 2024 of $ 6.07 billion, high in comparison to $ 4.9 billion 2023. 

“Larger expansion in import expenditure outpacing the expansion of export earnings led to the higher trade deficit in 2024 and in December 2024, the Central Bank said on Friday.

Earnings from merchandise exports in 2024 increased by 7.2% compared to 2023, reaching $ 12,772 million, which is the second highest annual export earnings in the history. This increase was driven by earnings from petroleum products (due to higher bunkering volumes), which crossed $ 1 billion for the first time. Textiles and garments increased and crossed $ 5 billion mark after 2022. Also, tea, food, beverages and tobacco, coconut related products and spices showed improved performance in 2024. However, export earnings from gems, diamonds and jewellery and machinery and mechanical appliances recorded a substantial decline in 2024. Meanwhile, earnings from merchandise exports in December 2024 increased to $ 1,102 million, supported by growth in both industrial and agricultural exports. The year-on-year (y-o-y) increase in industrial goods exports in December 2024 was primarily driven by petroleum products, owing to higher volumes of bunkering and aviation fuel exports. Earnings from agricultural goods exports also rose in December 2024, supported by higher tea exports, spices and coconut-related products. 

Expenditure on merchandise imports in 2024 amounted to $ 18,841 million, reflecting a year-on-year increase of 12.1%, driven by growth in all major import categories. Notable increases were observed in imports of machinery and equipment, textiles and textile articles, chemical products, base metals, building material, and plastics and articles thereof. Consumer goods related to food and beverages and non-food consumer goods (mainly home appliances) increased in 2024. However, fuel imports experienced a substantial decline in 2024 led by crude oil and coal imports. 

Meanwhile, expenditure on merchandise imports in December 2024 increased to $ 1,924 million, also driven by higher expenditure across all major import categories, recording the highest monthly imports for 2024. Consumer goods imports rose in December 2024, due to increased spending on both food items and non-food items. Meanwhile, expenditure on intermediate goods imports grew primarily due to higher imports of textiles and textile articles, with moderate increases in wheat and maize, fuel, and base metals. Expenditure on investment goods also saw an increase, driven by higher imports of machinery and equipment, particularly engineering equipment (such as cranes), compared to the previous year. 

The terms of trade, i.e., the ratio of export prices to import prices, deteriorated marginally to 85.5 index points in 2024 compared to 2023. The export volume index increased by 12.9% whereas the export unit value index decreased by 5.0% in 2024 compared to 2023. Similarly, the import volume index increased by 17.9% while the import unit value index decreased by 4.9% in 2024.

Meanwhile, the terms of trade in December 2024 deteriorated by 6.4% compared to December 2023, with the decline in export prices exceeding the decline in import prices. The export volume index improved, while the unit value index declined, indicating that the increase in export earnings was mainly driven by higher export volumes. Similarly, the import volume index increased, while the unit value index declined, suggesting that the rise in import expenditure was influenced by higher import volumes.