September 02, Colombo (LNW): Sri Lanka’s merchandise trade deficit widened in July, reflecting an increase in imports as the economy showed signs of normalisation.
The country’s exports reached US$ 1,130 million, marking a robust 10.8 per cent increase from the same period last year.
This growth was driven by strong performances in industrial exports, particularly textiles and garments, and agricultural products such as spices, tea, and coconut-related items.
However, the rising import demand, which surged by 25 per cent to US$ 1,734 million in July, outpaced the growth in exports.
All major categories of imports—intermediate, consumer, and investment goods—saw significant increases as economic activities picked up.
This resulted in a trade deficit of US$ 604 million for the month, a notable increase from the US$ 367 million recorded in July 2023.
Cumulatively, for the first seven months of the year, the trade deficit expanded to US$ 3,143.8 million, compared to US$ 2,656.6 million in the same period last year.
Despite the widening deficit, the overall economic situation indicates a return to normalcy, with the exception of vehicle imports, which remain suspended for the fifth consecutive year.
Fuel imports have also moderated, with the country spending US$ 336.9 million on refined and crude oil in July, a decline of 11.6 per cent from the previous year.
Over the first seven months, Sri Lanka’s fuel expenditure totalled US$ 2,546.1 million, down 6.9 per cent from the same period in 2023, thanks to relatively stable global oil prices.
On the positive side, the textile and garment sector continued to be a strong performer, earning US$ 444.6 million in July, a 3.7 per cent increase year-on-year, which helped narrow the sector’s overall earnings decline for the year to 1.3 per cent.
Tea exports also saw an 8.2 per cent increase, reaching US$ 124.7 million, while coconut and spices exports grew by 23.3 per cent and 63.3 per cent, respectively, to US$ 38.4 million and US$ 60.8 million.
Consumer imports, a key indicator of domestic demand, also showed signs of recovery, rising by 21.2 percent to US$ 323.3 million in July.
Food and beverage imports contributed US$ 177.7 million to this total, up 10.8 percent from last year.
Although dairy imports fell sharply by 53.1 percent, sugar and confectionery imports surged by 212 percent, reaching US$ 46.4 million.
Additionally, imports of consumer discretionary items such as home appliances, clothing, telecommunication devices, and household furniture showed significant increases, signalling a revival in consumer confidence and spending.
