Sri Lanka’s external sector performance continued to improve in the month of December 2018, reflecting the impact of policy measures implemented to discourage vehicle and nonessential consumer goods imports.
Although earnings from exports increased at a higher rate, the increase in import expenditure resulted in widening the trade deficit in the same month Central Bank announced.
The trade deficit declined significantly in December 2018 (year-on-year) with a notable deceleration in import expenditure.
Exports grew by 1.4 per cent while imports fell by 15.3 per cent in December 2018 (year-on-year).
Total exports of goods grew by 4.7 per cent in 2018 to US dollars 11.9 billion while imports recorded a growth of 6.0 per cent to US dollars 22.2 billion.
Consequently, the trade deficit widened moderately to US dollars 10.3 billion in 2018 from US dollars 9.6 billion in 2017.
Earnings from tourism remained healthy with a 4.8 per cent (year-on-year) growth in December 2018, resulting in a total income of US dollars 4.4 billion in 2018, a growth of 11.6 per cent from 2017.
Workers’ remittances recorded a marginal decline of 2.1 per cent in 2018 to US dollars 7.0 billion, including the drop of 13.0 per cent in December 2018.
In the financial account, the government securities market and the Colombo Stock Exchange (CSE) recorded outflows in December 2018.
The pressure on the exchange rate subsided during the latter part of December 2018, reflecting mainly the improvement in the trade balance.
Gross official reserves stood at US dollars 6.9 billion as at end 2018.