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Sri Lanka’s trade deficit widens in January with higher hike in imports 

 Sri Lanka’s deficit in the trade account widened to US dollars 859 million in January 2022, compared to the deficit of US dollars 655 million recorded in January 2021, with higher increase in imports.

However, the trade deficit in January 2022 narrowed compared to the deficit of US dollars 1,085 million recorded in December 2021. 

The major contributory factors of the trade deficit are the ratio of the price of exports to the price of imports which deteriorated by 18.7 per cent in January 2022, compared to January 2021, with prices of imports having increased while prices of exports declining, Central Bank said. 

Sr Lanka’s Import expenditure continued to expand, in spite of high earnings from exports exceeding US$ 1.0 billion for the eighth consecutive month, thereby widening the deficit in the trade account in January 2022, compared to January 2021, Central Bank announced Thursday 01 

Earnings from exports in January 2022 grew by 17.5 per cent over January 2021 to reach US dollars 1,101 million, recording the highest level of exports in the month of January. While increases in earnings were observed across all main categories, industrial exports mainly contributed to the expansion.

Expenditure on merchandise imports increased by 23.1 per cent to US dollars 1,959 million in January 2022, compared to US dollars 1,592 million recorded in January 2021, although it decreased compared to December 2021. Increases in expenditure were observed across all main categories, while intermediate goods imports mainly contributed to the expansion.

Tourist arrivals showed a notable recovery in January 2022 over the same month in the previous year, while moderation of workers’ remittances was observed in January 2022. 

Meanwhile, Sri Lanka successfully settled the International Sovereign Bond (ISB) of US dollars 500 million in January 2022. 

The financial account of the balance of payments strengthened during the month with the receipt of the SAARCFINANCE swap facility from the Reserve Bank of India. 

The weighted average spot exchange rate, which remained in Rs. 200-203 range in January, adjusted upwards with greater flexibility allowed in the exchange rate with effect from 07.03.2022

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