By: Staff Writer
November 30, Colombo (LNW): The deficit in the merchandise trade account narrowed to US dollars 544 million in October 2024 from US dollars 683 million recorded in October 2023, reflecting the positive impact of higher export earnings, Central Bank announced
However, the cumulative deficit in the trade account during January to October 2024widened to US dollars 4,745 million from US dollars 4,024 million recorded over the same period in 2023.
Earnings from merchandise exports increased by 24.8 per cent (y-o-y) to US dollars 1,158 million in October 2024.
This growth was primarily driven by industrial and agricultural exports.The increase in industrial goods exports in October 2024 (y-o-y) was broad-based, with notable contributions from garments and petroleum products.
However, declines were recorded in the categories of gems, diamonds and jewellery, as well as machinery and mechanical appliances.
Earnings from exports of agricultural goods increased primarily due to higher volumes and prices of tea, along with increased exports of spices and coconut-based products. Meanwhile, earnings from mineral exports declined in the same period.
Expenditure on merchandise imports recorded an increase of 5.7 per cent (y-o-y) to US dollars 1,702 million in October 2024. This increase was driven by higher spending on investment and consumer goods, while imports of intermediate goods declined.
Consumer goods imports increased in October 2024 compared to a year earlier, resulted by higher spending on both food (primarily edible oils) and non-food (primarily home appliances) consumer goods.
However, expenditure on intermediate goods imports declined primarily due to reduced fuel imports, as both the prices and volumes of refined petroleum and crude oil were lower compared to October 2023.
Expenditure on investment goods recorded an increase, driven by higher imports of machinery and equipment (mainly cranes and electric motors and generating sets).
Terms of trade, i.e., the ratio of the price of exports to the price of imports, improved by 1.8 per cent in October 2024 compared to October 2023, as the decline in the prices of imports surpassed thedecline in the prices of exports.
The export volume index improved by 31.7 per cent, while the unit value index declined by 5.3 percent, implying that the increase in export earnings in October 2024 compared to October 2023 can beattributed to higher export volumes.
Similarly, the import volume index increased by 13.6 per cent, while the unit value index declined by6.9 per cent, implying that the increase in import expenditure in October 2024 compared to October2023 was driven by the volume effect.
