Merchandise trade deficit narrowed to US dollars 495 million in September 2021, compared to US dollars 525 million in September 2020.
Earnings from exports continued to record values of over US dollars 1 billion for the fourth consecutive month in 2021 while import expenditure remained at almost the same level as in September 2020. Tourist arrivals continued the growth momentum with a notable increase over the previous month.
A moderation of workers’ remittances was observed in September 2021. The financial account of the balance of payments strengthened during the month with the receipt of the proceeds of the syndicated loan facility from the China Development Bank (CDB) and remaining proceeds of the bilateral currency swap arrangement between the Central Bank of Sri Lanka and the Bangladesh Bank.
The weighted average spot exchange rate in the interbank market appreciated and stabilised during the month with action by the Central Bank to clear the backlog of shipments of essential imports and guidance on the exchange rate.
However, the cumulative deficit in the trade account widened from January to September 2021 to US dollars 6,003 million from US dollars 4,337 million in the corresponding period of 2020. Earnings from exports in September 2021 grew by 3.1 per cent over September 2020 to reach US dollars 1,031 million. An increase in earnings was observed in industrial and mineral exports, while a decline was recorded in agricultural exports. Cumulative export earnings, which increased by 20.0 per cent during January-September 2021, amounted to US dollars 8,934 million, compared to US dollars 7,445 million recorded in the corresponding period in 2020.
The mismatch between the goods flow and the financial flow in relation to merchandise exports was observed during the month of September 2021 as well. Industrial exports: Earnings from the export of industrial goods increased by 4.0 per cent in September 2021, compared to September 2020. While the major export segments, such as garments, petroleum products, and rubber products, recorded substantial increases in earnings, a decline in earnings was reported by few minor segments, such as plastics and articles (mainly plastic clothing articles); printing industry products; gems, diamonds and jewellery; food, beverages and tobacco (mainly manufactured tobacco); leather, travel goods and footwear; and ceramic products.
Exports of garments to all major markets increased, except the UK. Earnings from the export of petroleum products increased mainly due to the increase in bunker fuel exports reflecting higher prices.
Tyres and gloves led the increase in export earnings from rubber products. Agricultural exports: Total earnings from the export of agricultural goods in September 2021 decreased by 0.6 per cent, compared to September 2020, mainly due to the decrease in export earnings from tea, unmanufactured tobacco, spices, and vegetables.