Sri Lanka’s trade deficit widens in May 2023

The Central Bank (CBSL) says the country’s trade deficit in May 2023 widened, compared to a year ago, for the first time since February 2022 while the cumulative trade deficit remained modest so far during 2023.

In its report on the External Sector Performance for May 2023, the Central Bank said the deficit in the merchandise trade account amounted to USD 447 million in May 2023, compared to USD 403 million recorded in May 2022, recording a year-on-year expansion for the first time since February 2022.

The cumulative deficit in the trade account from January to May 2023 was USD 1,926 million, a sizeable decline from USD 3,528 million recorded over the same period in 2022.

The earnings from merchandise exports meanwhile declined by 2.7% in May 2023 on a year-on-year basis, to USD 1,019 million, while increasing notably compared to April 2023.

The CBSL explained that the decline in earnings from industrial exports mainly contributed to the decline in export earnings amidst improved agricultural exports.

The department says the cumulative export earnings from January to May 2023 were recorded at USD 4,866 million, marking a decline of 7.7% over the same period in the last year.

Simultaneously, the expenditure on merchandise imports increased marginally to USD 1,466 million in May 2023, compared to US dollars 1,451 million in May 2022, recording the first year-on-year increase since February 2022.

The increase in expenditure on consumer goods contributed to the increase in import expenditure amidst the decline in expenditure on intermediate and investment goods imports.

The ongoing recovery in economic activities mainly contributed to the increase in import expenditure while the gradual relaxation of import restrictions could generate higher import expenditure in the period ahead.

The CBSL says the cumulative import expenditure from January 2023 to May 2023 declined by 22.8% over the corresponding period in 2022.

Meanwhile, the workers’ remittances increased notably to USD 480 million during May 2023 in comparison to USD 304 million in May 2022 and USD 454 million in April 2023.

Based on the provisional data, total departures for foreign employment from January to May 2023 and departures in May 2023 amounted to 122,350 and 26,458, respectively.

Departure levels in the first five months of 2023 were broadly similar to that in 2022. The annual departures for 2022 were around 311,056.