Sri Lanka’s external sector displayed a mixed performance in June 2018, latest data highlights. Even though the lowest trade deficit so far during the year in absolute terms was recorded amounting US $ 795 million  in the month of June, the trade deficit widened significantly in comparison to June 2017 level of US $ 554 million as the growth in import expenditure outpaced the increase in export earnings.

Earnings from tourism increased notably in June 2018 continuing the growth momentum observed since the beginning of the year, although workers’ remittances declined during the month in comparison to June 2017. The financial account of the Balance of Payments (BOP) was supported by the fifth tranche of the Extended Fund Facility of the International Monetary Fund (IMF-EFF) and the third tranche of the divestiture of the Hambantota Port, however, outflows of foreign investment from the government securities market and the secondary market of the Colombo Stock Exchange (CSE) exerted some pressure on the BOP. Reflecting developments in the domestic and global foreign exchange markets, the Sri Lankan rupee depreciated by 3.4% against the US Dollar by end June 2018 and by 5.0% per cent during the year up to 27 August 2018. The country’s gross official reserves as at end June 2018 were US $ 9.3 billion.