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Sri Lanka trade deficit narrows to US$ 358 million in Dec 2022

Colombo (LNW): Sri Lanka recorded a deficit in the merchandise trade account narrowed to US $ 358 million in December 2022, from $1,085 million recorded in December 2021, helped by a larger decline in imports, compared to the decline in exports, Central Bank announced.

Earnings from exports in 2022 surpassed $13 billion per year for the first time, recording an increase of 4.9 per cent from the previous highest recorded in 2021.

This improvement was a result of increased earnings from industrial exports, including garments, gems, diamonds and jewellery, machinery and mechanical appliances and petroleum products.

Meanwhile, total import expenditure in 2022 amounted to $18,291 million, recording a decline of 11.4 per cent, year-on-year, resulted from measures to restrict non-urgent imports and liquidity constraints prevailed in the market for the most part of 2022.

As a result, the deficit in the trade account in 2022 narrowed to the lowest level since 2010 to US $5,185 million, from $ 8,139 million recorded in 2021.

Earnings from merchandise exports declined by 7.7 per cent in December 2022, over December 2021, to $ 1,068 million.

Expenditure on merchandise imports declined by 36.4 per cent in December 2022 to US dollars 1,426 million, compared to US dollars 2,241 million in December 2021, continuing the year-on-year declining trend observed since March 2022.

The higher base in December 2021 and declines in volumes across all major categories resulted in this outcome.

Expenditure on the importation of consumer goods declined in December 2022, compared to December 2021, mainly due to the decline in non-food consumer goods imports, driven by the reduction in the import of medical and pharmaceuticals (base effect of higher expenditure on COVID vaccines in December 2021).

In addition, almost all other non-food consumer goods declined, partly due to the measures to restrict non urgent imports. Expenditure on food and beverages also declined, driven by lower cereals and milling industry products (mainly, rice), compared to that of December 2021.

Expenditure on the importation of intermediate goods declined in December 2022, compared to a year ago, driven by lower imports of base metals (primarily, base effect of high iron and steel imports in December 2021), and textiles and textile articles (primarily, fabrics).

Expenditure on fuel, the largest import component under this category, also recorded a decline, with declines in expenditure on refined petroleum and coal, mainly due to lower volumes imported, compared to December 2021.

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