Earnings from merchandise exports up by 4.3 % YoY in September to USD 1.08 Bn
Earnings from exports remained robust in September 2022, while import expenditure declined for the seventh consecutive month, on a year-on-year basis, reflecting the significant reduction in imports of non-food consumer goods and investment goods.
As a result, the merchandise trade deficit recorded a notable contraction in September 2022, (y-o-y). Workers’ remittances increased marginally in September 2022, (y-o-y). Earnings from tourism recorded an increase in September 2022, compared to the same period in 2021. Foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded a notable net inflow during September 2022. The Central Bank continued to provide forex liquidity to finance essential imports, exhausting the liquid level of gross official reserves. Meanwhile, the weighted average spot exchange rate in the interbank market remained around Rs. 362 per US dollar during the month.
The balance in the merchandise trade account recorded a deficit of US dollars 206 million in September 2022, compared to a deficit of US dollars 492 million recorded in September 2021 and US dollars 261 million recorded in August 2022. Meanwhile, the cumulative deficit in the trading account during January-September 2022 narrowed to US dollars 4,104 million from US dollars 5,999 million recorded over the same period in 2021. Terms of trade, i.e., the ratio of the price of exports to the price of imports, deteriorated by 1.1 per cent in September 2022, compared to September 2021, as the increase in import prices surpassed the increase in export prices.
Earnings from merchandise exports grew by 4.3 per cent in September 2022, over September 2021, to US dollars 1,079 million. However, merchandise exports in September 2022 recorded a decline compared to August 2022 (US dollars 1,224 million). An increase in earnings was observed in industrial and agricultural exports, while a marginal decline was recorded in mineral exports. Cumulative export earnings during January-September 2022 increased by 11.7 per cent over the same period in the last year, amounting to US dollars 9,981 million, which was mainly driven by the improvements in industrial exports.
Industrial exports: Earnings from the export of industrial goods increased in September 2022 by 4.2 per cent, compared to September 2021. The major export segments, such as garments; machinery and mechanical appliances (mainly, electronic equipment and mechanical appliances parts); and gems, diamonds, and jewellery contributed to this increase. Export of garments to most major markets improved except for the USA. Most of the other industrial export categories also showed improved performance, particularly, leather, travel goods and footwear and base metals and articles.
In contrast, export earnings from petroleum products; rubber products (primarily, rubber gloves); food, beverages and tobacco; printing industry products; and plastics and articles thereof declined in September 2022 (y-o-y). Earnings from exports of petroleum products recorded a decline of 44.1 per cent in September 2022 (y-o-y), due to lower volumes of the bunker and aviation fuel supplied despite a notable increase in average export price. Agricultural exports: Earnings from the exports of agricultural goods increased by 4.5 per cent in September 2022, compared to September 2021, mainly due to the increase in earnings from tea, minor agricultural products (mainly, edible nuts) and spices (mainly, cinnamon; and nutmeg and mace), while export earnings from unmanufactured tobacco and vegetables increased marginally.
Although the export volumes in September 2022 were lower than a year earlier, the unit price of tea exports increased, resulting in an increase in earnings from tea. However, there was a decline in export earnings from coconut-related products (primarily, fibres, desiccated coconut and coconut oil), seafood (primarily, shrimps and prawns) and natural rubber. Earnings from mineral exports declined by 1.7 per cent in September 2022, compared to September 2021, mainly due to a decline in export earnings from precious metals. Export indices: The export volume index declined by 6.7 per cent (y-o-y) while the unit value index improved by 11.8 per cent (y-o-y), in September 2022, indicating the increase in export earnings in September 2022 could be attributed to higher export prices.
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Workers’ remittances increase to USD359 Mn
Workers’ remittances increased to US dollars 359 million during September 2022, in comparison to US dollars 325 million in the previous month, recording the highest monthly remittances thus far during 2022. Meanwhile, total departures for foreign employment were recorded at 30,084 during September 2022. Total departures of foreign employment comprised unskilled (10,491), skilled (9,391) and domestic aid (7,027) categories. Total departures for foreign employment during January-September 2022 were recorded at 222,678 which exceeded the annual departures in pre-pandemic.
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Tourist arrivals dip to 29,802
Tourist arrivals moderated in September 2022 to 29,802, from 37,760 arrivals recorded in August 2022. India, the United Kingdom, Australia, and Germany remained the main source countries for tourist arrivals in September 2022. Earnings from tourism in September 2022 are estimated at US dollars 54 million, in comparison to US dollars 68 million in the previous month, and US dollars 35 million in the corresponding month in the previous year.