The deficit in the trade account contracted by US$ 2,386 million to US$ 4,854 million during the first eight months of 2019 in comparison to US dollars 7,240 million in the corresponding period of 2018.
Meanwhile, the terms of trade, which represents the relative price of imports in terms of exports, improved by 5.2 per cent (year-on-year) as import prices reduced at a faster pace than the reduction in export prices. However, on a cumulative basis, the terms of trade deteriorated marginally by 0.1 per cent during the first eight months of 2019 in comparison to the corresponding period of 2018.
Earnings from merchandise exports declined marginally by 0.4 per cent (year-on-year) to US$ 1,033 million in August 2019 led by a decline in agricultural exports followed by mineral exports while industrial exports grew, supported by higher earnings from textiles and garments. Earnings from textiles and garments increased by 7 per cent reflecting the higher demand from all major markets especially from the EU, which recorded a growth of 12.9 per cent.
Expenditure on merchandise imports contracted notably in August 2019 for the tenth consecutive month by 16.6 per cent (year-on-year) to US$ 1,574 million registering a decline across all major categories of imports.
Meanwhile, workers’ remittances declined by 3 per cent, year-on-year, to US$ 518 million in August 2019. On a cumulative basis, workers’ remittances declined by 7.6 per cent to US$ 4,414 million during the first eight months of 2019 in comparison to the corresponding period of 2018.
Foreign investments in government securities recorded a net outflow of US$ 156 million in August 2019.
On a cumulative basis, net outflows from the government securities market amounted to US dollars 285 million during the first eight months of the year.
Foreign investments in the CSE, including primary and secondary market transactions, recorded a net outflow of US dollars 12 million during the month of August 2019.
Nevertheless, financial flows to the CSE recorded a net inflow of US dollars 22 million during the first eight months of 2019.
Further, long term loans to the government recorded a net inflow of US dollars 83 million during August 2019. There were significant project loan inflows to the government in August 2019, with a number of social development and infrastructure projects receiving disbursements.
Gross official reserves stood at US dollars 8.5 billion by end August 2019, equivalent to 5.1 months of imports.
Meanwhile, total foreign assets, which consist of gross official reserves and foreign assets of the banking sector amounted to US dollars 11.3 billion as at end August 2019, which was equivalent to 6.8 months of imports.
The Sri Lankan rupee appreciated by 1.1 per cent against the US dollar during the year up to 14 October 2019.
Reflecting the cross-currency movements, the rupee appreciated against other major currencies except for the Japanese yen and the Canadian dollar during this period. Courtesy External Sector Perforance-Central Bank
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