Export earnings surpass USD 1 Billion for the fourth consecutive month

Sri Lanka’s export earnings have surpassed USD 1 billion for the fourth consecutive month, latest data from the Central Bank showed.

However, a higher growth in import expenditure has outpaced the increase recorded in export earnings.

The latest Central Bank’s External Sector Performance data highlights that the widening deficit in the trade account and the strengthening of the US dollar, which resulted in outflows of portfolio investments, adversely impacted the balance of payments during the month. In the financial account, foreign investments in the government securities market recorded outflows responding to the firming up of global financial markets. 

Meanwhile, the Colombo Stock Exchange (CSE) also witnessed some outflows of foreign investments during September. Consequently, the Sri Lankan rupee which depreciated against the US dollar by 5.3 per cent in the first eight months of the year, showed a further depreciation of 4.6 per cent in September, reflecting the pressure on the domestic foreign exchange market. 

These developments necessitated intervention by the Central Bank to curtail excessive volatility in the exchange rate. The country’s gross official foreign reserves stood at USD 7.2 billion at the end of September 2018 which was equivalent to 3.8 months of imports.

Earnings from industrial exports, which account for 77 percent of the total export earnings, grew by 9.4 percent during September 2018, while earnings from agricultural exports fell by 10.8 percent, reflecting the poor performance in almost all categories except seafood. 

Industrial export earnings from textiles and garments increased in September 2018 reflecting considerable high demand for garments from the USA and non-traditional markets such as Canada, India and Japan although a slight reduction was recorded in exports to the EU market. 

Earnings from petroleum products increased substantially in September 2018 due to higher export prices of bunker and aviation fuel, despite low export volumes. Export earnings from leather, travel goods and footwear, and base metals and articles increased in September 2018 contributing towards the increase in industrial exports.