• August trade deficit records US$ 430 mn, up from US$ 307mn recorded in August 2023
• Cumulative trade deficit widens to US$ 3,573.4 mn

Sri Lanka’s exports reached the highest levels so far this year, buttressed by the recovery seen in garment exports as of late but the deficit in the merchandise trade account expanded due to the faster increase in imports.

As a result of the two way trade, which is tilted towards imports due to a growing economy, the country reported a trade deficit of US$ 429.6 million for August, up from US$ 307.4 million a month ago but down significantly from the US$ 604 million in July.

The cumulative trade deficit meanwhile widened to US$ 3,573.4 million in the eight months, up from US$ 2,964.0 million in the same period in 2023. The exports grew by 6.1 percent to US$ 8,499.1 million during this period while imports grew by 10.0 percent to US$ 12,072.5 million. 

According to the latest merchandise trade data available through August, Sri Lanka had exported goods worth US$ 1,224.5 million, up 9.5 percent from the same month a year ago. This has largely been made possible by the apparel exports which rose by as much as 22.4 percent to US$ 477.5 million.

Taken together with textiles exports, the industry has generated US$ 512.1 million, up 17.4 percent reaching the highest levels since August 2022.

Meanwhile, imports rose by 16.0 percent to US$ 1,654.0 million in August 2024, again due to the imports of textiles and textile articles which rose by 20.8 percent to US$ 232.3 million.

Sri Lanka imported refined petroleum worth US$ 350.4 million in August, up 55.9 percent from the same month a year ago but the total fuel bill rose by only 2.0 percent to US$ 350.5 million as the country didn’t import crude oil at all during August.

Besides, the consumer goods imports also rose by 18.9 percent to US$ 318.8 million, reflecting a gradual normalising of consumer spending.

Food and beverage imports rose by 26.7 percent to US$ 192.9 million led by sugar and confectionery items and uncategorised food and beverages.

Under non-food consumer goods, there was a notable increase in the import of home appliances and clothing and accessories, reflecting that people are beginning to spend again on consumer discretionaries which they had to forgo for over two years. 

The September inflation print showed that prices have declined 0.5 percent in September for the first time in nearly 30 years due to persistent decline in the food prices and repeated cuts to fuel prices and the downward revision to electricity and water tariffs.

The money that is saved due these price cuts as of late appeared to be finding its way into discretionaries such as confectioneries, clothing and other durable goods - the things which the people could not afford until recently due to multifold increase in prices. This also leads to the expansion in the economy as a positive development.