June 01, Colombo (LNW): Sri Lanka’s external economic outlook displayed notable resilience in April 2025, with sustained inflows from tourism and overseas remittances continuing to support the island’s balance of payments, according to a monthly update released by the Central Bank’s Economic Research Department.
Despite headwinds in global trade, the Central Bank reported a continuing surplus in the monthly current account for the fourth consecutive month, a sign of steady progress in stabilising the economy’s external position.
The strong inflow of foreign currency from returning tourists and migrant workers has played a central role in cushioning the country’s finances during a challenging period of recovery.
However, the report noted a widening of the merchandise trade deficit compared to the same period last year and the previous month. A key contributor to this imbalance was the surge in imports, which outpaced export growth.
April saw imports jump by 17.5 per cent year-on-year, with motor vehicle purchases alone accounting for US$ 134 million in expenditure. In contrast, merchandise exports grew by a more modest 10.4 per cent.
Whilst the increase in imports indicates a revival of domestic demand—often associated with economic recovery—it also reflects renewed strain on the country’s trade balance. Nonetheless, the Central Bank noted a favourable shift in the terms of trade, as a sharper fall in global import prices compared to export prices offered a degree of relief.
In the capital markets, the dynamics were more nuanced. Foreign participation in government securities saw a slight reversal, with a marginal outflow of US$ 12 million, following a net inflow in the preceding month.
In contrast, activity in the Colombo Stock Exchange showed signs of renewed interest from foreign investors, reversing the previous trend of capital flight with a modest net inflow of US$ 3 million into both primary and secondary equity markets.
