External trade remains moderate in June

Exports down for the 16th consecutive month

The country’s trade deficit widened 6.0% to $ 779 million in June 2016 from $ 735 million a year earlier, according to the Central Bank.

It said yesterday on a cumulative basis, in the first half of 2016, the trade deficit increased by 2.2% to $ 4.213 billion from $ 4.122 billion recorded during the same period of 2015.

The Bank said the external sector performance remained moderate in June 2016 with a widening trade deficit and relatively low growth in workers’ remittances and tourist earnings.

The trade deficit which showed gradual improvements in the first four months of the year deteriorated in May and June with weak performance in both exports and imports.

Earnings from exports declined for the 16th consecutive month in June 2016 by 5.0%, year-on-year, to $ 896.8 million in June 2016 from $ 944 billion recorded in June 2015, reflecting contractions in all major categories of exports.

On a cumulative basis, exports earnings during the first six months of 2016 declined by 5.8%, year-on-year, to $ 5.107 billion from $ 5.424 billion last year. The decline was attributed to the substantial reduction in price levels of export commodities in the international market.

Expenditure on imports declined marginally by 0.2%, year-on-year, to $ 1.676 billion in June 2016. Import expenditure on vehicles, wheat and fertiliser declined significantly during the month.

On a cumulative basis, expenditure on imports during the first six months of 2016 contracted by 2.4% to $ 9.321 billion, mainly due to the declines recorded in fuel, transport equipment, personal motor vehicles and rice imports.

Cumulative earnings from tourism increased to $ 1.598 billion during the first six months of 2016 compared to $ 1.376 billion recorded during the same period in 2015.

Workers’ remittances increased moderately by 2.2%, year-on-year, to $ 644.5 million in June 2016 from $ 629.6 million recorded in June 2015. The cumulative inflow from workers’ remittances increased by 5.3% to $ 3.613 billion during the first six months of 2016 in comparison to the corresponding period of 2015.

During the first six months of the year, foreign investments in the Colombo Stock Exchange (CSE) recorded a net outflow of $ 40.9 million and the government securities market recorded a net outflow of $ 371.8 million.

During the first six months of 2016, the overall BOP is estimated to have recorded a deficit of $ 1.186 billion in comparison to a deficit of $ 1.142 billion recorded during the corresponding period of 2015.

Sri Lanka’s gross official reserves as at end June 2016 amounted to $ 5.3 billion, equivalent to 3.4 months of imports while total foreign assets amounted to $ 7.3 billion, equivalent to 4.7 months of imports.

The rupee recorded a modest depreciation of 1.0% against the US dollar during the period from end 2015 to 2nd September 2016.