September trade balance narrows as expenditure on imports continues to decline

• Sept. trade gap at US $ 206mn, compared to US $ 492mn YoY
• Cumulative trade gap narrows to US $ 4.1bn, from US $ 5.99bn
• Sept. exports at US $ 1.07bn; imports at US $ 1.28bn
• Fuel bill surges 87.3% to US $ 376.4 amid higher refined petroleum imports 

Sri Lanka recorded a positive development in its trading balance for the seventh consecutive month, with the September trade gap narrowing, as exports rose and imports declined significantly amid the restrictions imposed by the authorities. 
The September trade balance narrowed to US $ 206 million, from US $ 492 million year-on-year (YoY), as merchandise exports rose 4.3 percent YoY to US $ 1.07 billion and imports fell 15.8 percent YoY to US $ 1.28 billion.

For the first nine months of 2022, the cumulative trade gap was US $ 4.1 billion, compared to US $ 5.99 billion in the corresponding period of last year.
The decline in imports of transport equipment, medical and pharmaceuticals, telecommunication devices, base metals and machinery and equipment was identified as the main contributor towards the narrowing of the trade deficit in September. 

Meanwhile, industrial exports during September, led by textile and garment exports, rose 4.2 percent YoY to US $ 842.8 million. Textile and garment exports rose 5 percent YoY to US $ 481.5 million.
For the nine-month cumulative period, textile and garment exports rose 17.6 percent YoY to US $ 4.5 billion. 

However, rubber product exports fell 13.2 percent YoY to US $ 78.9 million while petroleum product exports fell 44.1 percent YoY to US $ 30 million.
Gems, diamonds and jewellery exports recorded a notable 129.1 percent YoY increase to US $ 46.9 million. 
Agricultural products in September 2022 fetched in US $ 231.2 million, up 4.5 percent YoY, led by tea exports, which rose 13.2 percent YoY to US $ 117.8 million. The export income from coconut, rubber and fish fell during September 2022 compared to the previous year.

Meanwhile, imports fell during September 2022, as expenditure on consumer goods and investment goods fell 35.3 percent YoY to US $ 201.1 million and 53.7 percent YoY to US $ 169.5 million, respectively. 
The country’s fuel bill, under intermediate goods imports, rose 87.3 percent YoY to US $ 376.4 million amid higher imports of refined petroleum.

The import expenditure on textile and textile articles however fell 11.7 percent YoY to US $ 231.5 million. 
The import expenditure on machinery and equipment in September 2022 fell 52.3 percent YoY to US $ 108.3 million while transport equipment imports fell 92.2 percent YoY to US $ 3.3 million, reflecting the slowdown in economic activities amid import restrictions and the foreign exchange crunch.

Meanwhile, in a positive development, workers’ remittances during the month of September rose by marginal 1.7 percent YoY to US $ 359 million while the earnings from tourism rose 51.8 percent YoY to US $ 54 million. 
Sri Lanka is expected to cross the US $ 1 billion in tourism earnings this year, as for the cumulative nine-month period such income was at US $ 946 million. Sri Lanka is expecting an extremely good winter tourism season, with increased arrivals specially from Europe. 
Meanwhile, during September 2022, the Colombo Stock Exchange received foreign inflows of US $ 41 million, compared to an outflow of US $ 34 million.