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Sri Lanka’s trade deficit narrows in March 2022

Sri Lanka’s deficit in the trade account narrowed to US dollars 762 million in March 2022, compared to the deficit of US dollars 832 million recorded in March 2021 and US dollars 781 million recorded in February 2022, Central Bank announced.  

However, the cumulative deficit in the trade account during January to March 2022 widened to US dollars 2,402 million from US dollars 2,059 million recorded over the same period in 2021. 

The  ratio of the price of exports to the price of imports deteriorated by 16.0 per cent in March 2022, compared to March 2021, as the import prices increased on a y-o-y basis, compared to a corresponding y-o-y decline in export prices.

Earnings from exports exceeded US dollars 1.0 billion for the tenth consecutive month in March 2022, despite a marginal decline compared to year earlier. 

Meanwhile, import expenditure recorded a notable decline, year-on-year, for the first time since February 2021. As a result, the trade deficit declined in March 2022 on a year-on-year basis. 

: Earnings from merchandise exports in March 2022 declined by 3.4 per cent over March 2021 to reach US dollars 1,057 million. 

A decrease in earnings was observed in agricultural exports and mineral exports, while an increase was recorded in industrial exports. 

The cumulative export earnings increased by 9.0 per cent during January-March 2022 over the same period of the last year, amounting to US dollars 3,249 million.

: Expenditure on merchandise imports, which has been falling on a month-on-month basis since January 2022, continued the decline recording the first year-on-year decline since February 2021. 

Accordingly, import expenditure declined by 5.6 per cent to US dollars 1,819 million in March 2022, compared to US dollars 1,926 million recorded in March 2021. 

A decline in expenditure was observed in import of consumer goods and investment goods, while an increase was recorded in import of intermediate goods.

 On a cumulative basis, total import expenditure amounted to US dollars 5,651 million during the first quarter of 2022, recording an increase of 12.1 per cent (yo-y). 

Considering the continuous pressure on the external sector, the Government imposed several restrictions on selected non-urgent and non-essential consumer items during March 2022, such as import license requirements, while increasing import duty

Tourist arrivals and workers’ remittances showed a notable improvement in March 2022, compared to the previous month. Foreign investment in the Colombo Stock Exchange (CSE) recorded a net inflow during March 2022. 

The Central Bank started publishing a middle rate and variation margin of the interbank weighted average spot exchange rate beginning 13 May 2022 in view of curtailing any large volatility in the intraday exchange rate in the domestic foreign exchange market.

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