Merchandise export earnings decline, trade deficit contracts in October 2022

Port of Colombo in Sri Lanka

Buildings are seen over the containers at the Port of Colombo in Colombo, Sri Lanka, on Wednesday, April 25, 2022. (Photographer: Buddhika Weerasinghe / Bloomberg via Getty Images)

Earnings from merchandise exports declined in October 2022 – on a year-on-year basis – for the first time since March 2022 due to lower earnings from garments exports, the Central Bank of Sri Lanka (CBSL) says.

The decline in import expenditure continued in October 2022, (y-o-y), for the eighth consecutive month, despite recording an increase, compared to September 2022.

The merchandise trade deficit recorded a notable contraction in October 2022, compared to the previous year.

Meanwhile, the workers’ remittances steadied and earnings from tourism improved in October 2022, whereby earnings from tourism crossed over USD 1 billion during January-October 2022, while workers’ remittances reached about USD 3 billion from January to October 2022.

Foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded a marginal net inflow during October 2022.

The central bank says it continued to provide forex requirements to finance essential imports, exhausting the liquid level of gross official reserves.

Meanwhile, the weighted average spot exchange rate in the interbank market remained around Rs. 363 per US dollar during the month.