External Sector Performance – July 2023

The deficit in the merchandise trade account increased in July 2023 to US dollars 367 million, compared to US dollars 122 million recorded in July 2022. However, the cumulative deficit in the trade account during January to July 2023 narrowed to US dollars 2,657 million from US dollars 3,628 million recorded over the same period in 2022, driven by lower imports.

Overall Exports: Earnings from merchandise exports declined by 12.4 per cent in July 2023, over the corresponding month in 2022, to US dollars 1,020 million. The decline in earnings from industrial exports, including garments, associated with slowing external demand mainly contributed to this contraction in export earnings in July 2023, compared to a year earlier. However, earnings from exports in July 2023 increased compared to June 2023. Cumulative export earnings during January to July 2023 also declined by 10.3 per cent over the same period in the last year, amounting to US dollars 6,891 million.

Industrial Exports: Earnings from the exports of industrial goods declined in July 2023, compared to July 2022, with a significant share of the decline being contributed by garments. Accordingly, exports of garments to most of the major markets (the USA, the EU and the UK) recorded declines. Further, a sizable decline was recorded in the exports of rubber products (mainly, gloves and tires); transport equipment; gems, diamonds and jewellery; chemical products (mainly, activated carbon).

However, earnings from petroleum products increased in July 2023 due to the increase in both prices and volumes of bunker and aviation fuel exports.

Agricultural Exports: Earnings from the exports of agricultural goods improved in July 2023, compared to a year ago, mainly due to the increase in earnings from minor agricultural products (primarily, edible nuts) and spices (primarily, pepper), while export earnings from unmanufactured tobacco and vegetables also increased marginally. Earnings from tea exports declined marginally driven by lower export prices, while export volumes remained at similar levels in July 2023, compared to July 2022. In addition, there was a decline in export earnings from seafood (mainly, crustaceans), coconut related products (mainly, coconut oil and desiccated coconut) and natural rubber.

Mineral Exports: Earnings from mineral exports increased in July 2023, compared to July 2022, mainly due to an increase in export earnings from earths and stone.Overall Imports: Expenditure on merchandise imports increased by 7.8 per cent (year-on-year) to US dollars 1,388 million in July 2023, compared to US dollars 1,287 million in July 2022 and US dollars 1,369 million in June 2023.

(CBSL)