The momentum of Sri Lanka’s export earnings continued with over US$ 1 billion for the ninth consecutive month in February 2022.
Meanwhile, import expenditure also increased substantially in February 2022, year-on-year, while recording a decline, compared to the previous month. The trade deficit widened, compared to the year before. Tourist arrivals showed a notable recovery in February 2022 over the same month in the previous year. Workers’ remittances continued to moderate in February 2022, the Central Bank said in a statement.
Foreign investment in the Colombo Stock Exchange (CSE) recorded a net inflow during the month. The weighted average spot exchange rate in the interbank market hovered around Rs. 202 per US dollar during February 2022. However, the Central Bank allowed a measured adjustment in the exchange rate in the first week of March 2022, in view of the heightened pressures on the exchange rate amidst subdued liquidity in the domestic foreign exchange market, resulting in an overshoot subsequently by market forces beyond the expected level of depreciation in the measured adjustment.
Trade Balance: The deficit in the trade account widened to $781 million in February 2022, compared to the deficit of $572 million recorded in February 2021. However, on a month-on-month basis, the trade deficit declined in February 2022 from $859 million recorded in January 2022.
Meanwhile, the cumulative deficit in the trade account during January to February 2022 widened to $1,640 million from $1,227 million recorded over the same period in 2021, the statement said.
Terms of Trade: Terms of trade, i.e., the ratio of the price of exports to the price of imports, deteriorated by 10.7 per cent in February 2022, compared to February 2021, as the increase in import prices surpassed the increase in export prices.
Overall exports: Earnings from merchandise exports in February 2022 grew by 14.7 per cent over February 2021, recording at $1,092 million. An increase in earnings was observed in industrial exports and mineral exports, while a decrease was observed in agricultural exports.
The cumulative export earnings, which increased by 16.1 per cent during January-February 2022 over the same period of the last year, amounted to $2,192 million.
Industrial exports: Earnings from the export of industrial goods increased in February 2022 by 19.4 per cent, compared to February 2021. This increase was due to a broad-based increase in earnings from most of the industrial products led mainly by garments and petroleum products.
The statement said export of garments to all major markets improved. Earnings from the export of petroleum products increased due to the increase in both prices and volumes of bunker and aviation fuel exports.
Further, a sizable increase was recorded in the exports of food, beverages and tobacco (mainly manufactured tobacco, chocolate and liquid coconut milk), base metals and articles (mainly tools and aluminium structures), rubber products (mainly solid tires and surgical rubber gloves), gems, diamonds and jewellery, machinery and mechanical appliances (mainly mechanical appliances parts and electric conductors).