January trade gap widens amid swelling oil bill

Sri Lanka’s trade deficit widened in the first month of this year as the country consumed more imported goods than what it exported during the month, according to the import-export trade figures seen by Mirror Business.

Sri Lanka imported goods worth of US $ 2.01 billion during January, which mainly fell under the consumer and intermediate goods categories. The swelling fuel bill was the biggest contributor as Sri Lanka imported more fuel at higher prices to generate thermal power. 

The January fuel bill rose by 28 percent year-on-year (YoY) to US $ 362 million as the country was making short-term fixes to avert a power crisis amid the increasing demand and dwindling hydropower generation capacity due to adverse weather. 

In January, total imports marked a 12 percent YoY increase, which is faster than the 11.6 percent YoY increase in exports. The export earnings in January was US $ 965 million, less than even a half of what the country paid for its imports. This resulted in the January trade deficit expanding little over US $ 1 billion. The trade deficit in the same month last year was US $ 934 million. 

In 2017, Sri Lanka’s trade deficit expanded to US $ 9.6 billion from US $ 8.9 billion in 2016.

The growing trade deficit due to higher fuel bill and consumption imports overshadowed the continuous double-digit expansion recorded by exports since July, last year. 

Sri Lanka’s total exports in 2017 grew by 10.2 percent YoY to US $ 11.4 billion and the imports rose by 9.4 percent YoY to US $ 21 billion.

In January this year, the consumer goods rose by 23 percent YoY to US $ 442 million with both food and non-food consumption expenditure seen increasing.

The expenditure on vehicle imports rose by a steeper 44 percent YoY to US $ 95 million. The corresponding figure in the same month last year was US $ 66 million. 

Import of fertilizer, gold and rice also contributed significantly to the higher import bill in January. 
For instance, fertilizer imports rose to US $ 42.4 million during January from just US $ 4.2 million in the same month last year. 

January’s exports were largely driven by tea, food and beverage and tobacco, petroleum products and rubber products. 

However, there were declines in export of coconut, spices and unmanufactured products.