August 31, Colombo (LNW): The merchandise trade deficit increased significantly to USD 604 million in July 2024 from USD 367 million in July 2023, largely due to higher import costs. The cumulative trade deficit from January to July 2024 expanded to USD 3,144 million, compared to USD 2,657 million during the same period in 2023, Central Bank announced. .
Merchandise export earnings rose by 10.8% year-over-year to USD 1,130 million in July 2024, driven primarily by industrial exports. The growth in industrial exports was mainly attributed to increased exports of petroleum products, including bunkering and aviation fuel.
There were also notable improvements in exports of textiles, garments, and transport equipment. Agricultural export earnings improved due to higher exports of spices (mainly pepper), tea (driven by higher prices), and coconut-related products, despite a decline in minor agricultural exports. Mineral exports also saw an increase in July 2024.
On the other hand, merchandise import expenditure grew by 25% year-over-year to USD 1,734 million in July 2024. This increase was broad-based, with significant rises in the import of intermediate goods and investment goods.
Consumer goods imports also rose, particularly in food and beverages, as well as non-food items like clothing, home appliances, and telecommunication devices. Intermediate goods imports surged due to higher imports of textiles, base metals, and chemical products, although fuel import costs declined due to reduced crude oil imports. Investment goods imports saw a widespread increase, particularly in machinery and equipment.
The services sector (excluding tourism) recorded inflows of USD 337 million in July 2024, up from USD 311 million in July 2023, mainly driven by computer & IT/BPO services and sea transport. However, services outflows also rose sharply to USD 290 million in July 2024 from USD 161 million in July 2023, with significant contributions from overseas travel, sea transport, and air transport.
Workers’ remittances amounted to USD 567 million in July 2024, compared to USD 541 million in July 2023, marking the fifth consecutive month of remittances exceeding USD 500 million.
In the financial markets, there was a net outflow of USD 23 million in foreign investments in government securities in July 2024, leading to a cumulative net outflow of USD 221 million from January to July 2024.
Conversely, foreign investments in the Colombo Stock Exchange (CSE) recorded a net inflow of USD 12 million in July 2024, with a cumulative net inflow of USD 32 million during the first seven months of 2024.Gross Official Reserves (GOR) stood at USD 5.7 billion at the end of July 2024, up from USD 4.4 billion in December 2023, including a swap facility from the People’s Bank of China, which has conditional usability. The Central Bank’s net foreign exchange purchases amounted to USD 121 million in July 2024, with GOR providing 3.8 months of import coverage
