August trade gap expands amid sluggish apparel exports

• Trade gap expands to US $ 307mn, from US $ 260mn a year ago
• Cumulative deficit narrows to US $ 2,964mn, from US $ 3,889mn
• Merchandise exports down 8.7% to US $ 1,119mn 
• Apparel exports down 23% to US $ 436mn

Sri Lanka’s trade balance expanded in August, as earnings from merchandise exports fell due to the continuous decline in apparel exports, while the imports during the month remained subdued.
August trade deficit expanded to US $ 307 million, from US $ 260 million a year ago. However, the cumulative deficit in the trade account during January to August 2023 narrowed to US $ 2,964 million, from US $ 3,889 million recorded over the same period in 2022, due to a larger decline in imports, offsetting the decline in exports.

Earnings from merchandise exports in August were reported at US $ 1,119 million, down 8.7 percent year-on-year (YoY). Nevertheless, earnings from exports in August 2023 marked the highest monthly earnings so far in 2023.
Industrial exports, led by textile and garment exports, fell 9.8 percent YoY to US $ 871.7 million. Textile and garments exports fell 23.1 percent YoY to US $ 436.2 million, amid continued slowdown in demand.
It is estimated that Sri Lanka would lose about US $ 1 billion from apparel exports this year compared to last year.
Rubber products exports, mainly consisting of tyres, also fell 19.1 percent YoY to US $ 78.2 million.
Sri Lanka’s agricultural exports, led by tea, fell 4.5 percent YoY to US $ 242.9 million in August 2023. Tea exports declined 3.8 percent YoY to US $ 119.6 million.
Seafood exports also fell 30.8 percent YoY to US $ 17.7 million.
Export of spices recorded an 18.2 percent YoY increase to US $ 47.4 million in August 2023.
Meanwhile, Sri Lanka’s import bill in August 2023 fell 4 percent YoY to US $ 1,426 million.
Consumer goods imports rose 15.9 percent YoY to US $ 268.1 million. A sharp increase of nearly 750 percent was seen in the import of telecommunication devices to US $ 10.9 million from a year ago, as the government removed the import restrictions on such products.
Import of intermediate goods, mainly consisting of oil imports, fell 17.3 percent YoY to US $ 857.1 million. Fuel imports fell 11.6 percent YoY to US $ 343.7 million.

Investment goods imports rose 40.8 percent YoY to US $ 299.4 million in August 2023. Machinery and equipment imports rose 68.6 YoY to US $ 229.5 million, indicating the slowly recovering manufacturing sector of the country.
Meanwhile, earnings from tourism in August 2023 were reported at US $ 211 million, while the country received workers’ remittances worth of US $ 499 million in the month.