Sri Lanka’s external sector continued to show resilience in the first five months of 2025, with the current account maintaining surpluses throughout the period, supported by higher remittance inflows and a recovery in tourism.

The country’s merchandise trade deficit widened in May 2025 compared to a year earlier, driven by a faster year-on-year growth in imports relative to exports. However, the deficit narrowed compared to April 2025. Vehicle imports—both personal and commercial—rose to USD 118 million in May, bringing the cumulative figure for January to May 2025 to USD 312 million.

Meanwhile, the terms of trade deteriorated in May, as the rise in import prices outpaced the increase in export prices.

The United States, India, and the United Kingdom remained Sri Lanka’s top export destinations, while China, India, and the United Arab Emirates continued to be the main sources of imports both in May and during the January–May period.

The services sector recorded net inflows of USD 1.8 billion during the first five months of the year, marking a 6.8% increase over the same period in 2024, despite a slight dip in inflows in May 2025.

Tourism earnings reached USD 164 million in May alone, with cumulative revenue amounting to USD 1.5 billion for the first five months. Workers' remittances also saw strong growth, rising 17.9% year-on-year in May, contributing to total remittances of USD 3.1 billion so far this year.

On the financial side, foreign investment in government securities returned to a marginal net inflow in May, reversing the net outflow recorded in April. Similarly, foreign investment in the Colombo Stock Exchange posted a marginal net inflow for the month.

Sri Lanka’s gross official reserves stood at USD 6.3 billion at end-May 2025, broadly unchanged from the previous month. This includes the swap facility with the People’s Bank of China.

As of end-June 2025, the Sri Lanka rupee had depreciated by 2.5% against the US dollar on a year-to-date basis.