Sri Lanka’s deficit in the trade account has been on a continuous expansion, but the pace at which it grew during the month of May decelerated after many months, as the country’s goods exports grew faster than its imports bill. The exports in May led by industrial goods grew by just shy of 10 per cent to $924 million from the same month in 2017, while the imports—driven mostly by fuel—grew by 7.7 per cent to $1.9 billion, digging a hole of $933 million in the trade account compared to $884 million deficit a year ago. Meanwhile, for the first five months of the year, Sri Lanka had a $4.9 billion trade deficit by importing goods worth of $9.6 billion, up 11.8 per cent year-on-year (YoY) and exporting goods worth of $4.7 billion, up just 6.7 per cent YoY.
May’s exports were mainly driven by industrial exports, led by textiles and garments—Sri Lanka’s largest export commodity. Earnings from textiles and agreement exports rose by 10.9 per cent YoY to $398.3 million while the first five months’ exports rose by 4.0 per cent YoY to $2.1 billion. Export earnings from petroleum products increased by as much as 70 percent YoY to $46.1 million due to the, “combined effect of high exported volumes of bunker and aviation fuel together with increased export prices”, the Central Bank said in a statement.
With regard to imports, the Central Bank singled out fuel and vehicle imports as key factors for the higher import bill in May. Gold imports have retreated after the imposition of heavy tax on imports in mid-April. Sri Lanka’s fuel bill for the month was $348.9 million, up 61.8 per cent YoY, of which refined petroleum and crude oil composed of $233 million and $116 million, respectively. The Central Bank cited both higher global oil prices and volumes imported as the reasons for the elevated oil bill. For the first five months, the total oil bill of the country was US$ 1.8 billion, up 23 percent YoY. The non-fuel imports have declined marginally, the Central Bank said, stressing the notable contribution made by fuel to the country’s imports bill.