November exports up 16%

February, 2, 2018

The external sector performance in November 2017 was supported by continued inflows to the financial account of the Balance of Payments (BOP) mainly with higher foreign inflows to the government securities market, and marginally improved earnings from tourism.

Although a double-digit growth in exports has been recorded, partly driven by the low base recorded in November 2016, the trade deficit expanded considerably during the month with higher imports. Meanwhile, workers’ remittances continued to decline, owing to adverse economic and geopolitical conditions prevailing in the Middle Eastern region. Accordingly, the BOP recorded an overall surplus of around US dollars 2.0 billion by end November 2017.

Gross official reserves also increased to US dollars 7.3 billion (equivalent to 4.2 months of imports) by end November 2017 from US dollars 6.0 billion recorded at end 2016.
The deficit in the trade balance expanded in November 2017, while the trade deficit on a cumulative Basis also widened during the first eleven months of 2017 in comparison to the value recorded during the corresponding period of the previous year. This was due to higher import expenditure on account of increased expenses on fuel imports.

Exports continued to record a double-digit growth for the fifth consecutive month in November 2017. However, this growth was partly driven by the low base recorded in November 2016. Earnings from textiles and garments exports contributed largely for this growth.

Export earnings from garments increased for the fifth consecutive month in November 2017 with increased demand from the EU and the USA and non-traditional markets such as Australia, Hong Kong and UAE.

Following the restoration of the GSP+ facility, earnings from garment exports to the EU continued to expand, and in November 2017, it grew by 13.8 per cent (year-on-year), while garment exports to the USA increased by 11.9 per cent.

In addition, earnings from seafood exports increased significantly during the month mainly due to increased exports to the EU market reflecting the positive impact of the removal of the ban on exports of fisheries products to the EU market and the restoration of the GSP+ facility.

Reporting the highest monthly value since November 2011, expenditure on imports increased significantly in November 2017. This was due to high expenditure incurred for fuel imports as a result of significant increase in crude oil and refined petroleum products.

Despite the slower than expected improvement in the current account, the financial account of the BOP continued to strengthen during the month of November 2017.

Sri Lanka’s gross official reserves increased from US dollars 6 billion recorded as at end 2016 to US dollars 7.3 billion by end November 2017, which are sufficient to finance 4.2 months of imports.