Trade Account deficit reaches USD 607 mn in July 2021
Earnings from export of goods increased during the month over a year earlier, but expenditure on imports increased at a faster pace, causing the trade deficit to widen for the fifth consecutive month in July 2021. Earnings from merchandise exports in July 2021 recorded an increase of 1.7 % to US dollars 1,104 million compared to July 2020. Earnings from the export of industrial goods increased by 1.1% in July 2021 compared to July 2020. Total earnings from the export of agricultural goods in July 2021 increased by 2.3% compared to July 2020, mainly due to the increase in export earnings from seafood and spices. However, earnings from the export of tea declined significantly, due to a decline in both volume and prices of tea exported.
Expenditure on merchandise imports increased by 32.2 percent to US dollars 1,710 million compared to US dollars 1,294 million recorded in July 2020. The increase in import expenditure was observed across all main categories of imports, namely, consumer goods, intermediate goods and investment goods, despite some import controls still being in place. On a cumulative basis, total import expenditure from January to July 2021 amounted to US dollars 11,725 million, compared to US dollars 8,968 million recorded in the corresponding period in 2020.
Expenditure on the importation of food and beverages declined by 9.4 % with the decline primarily stemming from sugar, milk powder and seafood. However, import expenditure on some food and beverage segments such as coconut oil, and spices (mainly chilies) increased.
Expenditure on imports of non-food consumer goods increased by 41 %, with a broad-based increase in all non-food consumer goods (except personal vehicles, which are under import restrictions).
This increase is largely attributable to the imports of medical and pharmaceuticals (mainly vaccines), home appliances (mainly televisions), and rubber tyres. Import expenditure on telecommunication devices recorded a slight decline.
Expenditure on the importation of intermediate goods in July 2021 increased by 33.8 % over July 2020 with increases in most of the main categories.
Expenditure on the importation of investment goods increased by 42.4 %t in July 2021 compared to the same month in 2020, with substantial increases in almost every subcategory under the three types of investment goods, namely, machinery and equipment, building material and transport equipment. Import expenditure on cement, however, nearly halved.
Workers’ remittances declined in July, following the trend observed in June 2021.
Foreign investment in the government securities market recorded a marginal net inflow, while the Colombo Stock Exchange (CSE) continued to record net outflows during the month.