Trade deficit narrows in November as import expenditure declines

• November trade deficit narrows to US $ 390mn YoY
• Import expenditure dips by 3.9%; export earnings expand by 0.4% YoY
• Cumulative deficit for January-November 2023 narrows to US $ 4.4bn 

Sri Lanka’s trade deficit narrowed in November, due to a decline in import expenditure and a marginal increase in export earnings, the data released by the Central Bank showed. 
The deficit in the merchandise trade account narrowed to US $ 390 million in November 2023, compared to the US $ 449 million recorded in November 2022. This is also a contraction compared to the US $ 683 million recorded in 
October 2023.  
Earnings from merchandise exports recorded a year-on-year (YoY) marginal increase in November 2023, for the first time since September 2022. Export earnings improved by 0.4 percent to US $ 999 million in November 2023, over November 2022 as well as over US $ 928 million in October 2023. 
An increase in earnings was seen in agricultural exports and mineral exports. However, a decline was recorded in industrial exports. 
The cumulative export earnings recorded a decline of 9.4 percent from January to November 2023 to US $ 10,909 million over the same period, last year. 

Meanwhile, expenditure on merchandise imports declined by 3.9 percent (YoY) to US $ 1,389 million in November 2023, compared to US $ 1,445 million in November 2022. The import expenditure recorded in November has contracted even compared to the US $ 1,610 million recorded in October 2023. 
According to the Central Bank, a decline in import expenditure was observed in intermediate goods, mainly resulting from lower fuel import expenditure.  
However, an increase was recorded in imports of investment goods and consumer goods, partly due to the relaxation of import restrictions. Meanwhile, the cumulative import expenditure from January to November 2023 declined by 9.1 percent to US $ 15,323 million over the corresponding period, last year. 
The cumulative analysis shows that the deficit in the trade account during the January to November 2023 period narrowed to US $ 4,414 million, from US $ 4,827 million recorded over the corresponding period in 2022. 
Looking at the Terms of Trade, the ratio improved by 2.5 percent in November 2023, compared to November 2022. The improvement is due to the decline in the prices of imports surpassing the decline in the prices of exports. 
The Central Bank pointed out that while the marginal improvement in export earnings in November 2023 can be attributed to the higher export volumes, the decline in import volume was driven by the price effect. 
Furthermore, workers’ remittances amounted to US $ 537 million in November 2023, while earnings from tourism continue to improve and are estimated at US $ 205 million.  
Foreign investments in the government securities market continued to record a net outflow of US $ 73 million in November 2023. 
However, the year-to-date net inflows continued to be positive and stand at US $ 233 million. The gross official reserves amounted to US $ 3.6 billion by the end of October 2023.  
The exchange rate continued to remain stable during November 2023. During 2023, the Sri Lanka rupee appreciated by 12.1 percent against the US dollar.