Trade deficit widens in June
The cumulative deficit in the trade account in the first half of the year also widened to US dollars 4,316 million from US dollars 3,262 million recorded in the corresponding period in 2020, and US dollars 3,597 million recorded in the corresponding period in 2019.
Both exports and imports were significantly higher in June 2021. Considering the first half of the year, although exports recorded a healthy growth, import expenditure increased at a higher pace. Workers’ remittances recorded a year-on-year decline in June 2021, while earnings from tourism remained at minimal levels.
In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) continued to record marginal net outflows during the month. Earnings from merchandise exports recorded an increase of 12.6% to US dollars 1,007 million on a year-on-year basis.
Total earnings from industrial exports from January to June 2021 amounted to US dollars 4,408 million with a growth of 31.3% from the same period in 2020.
Total earnings from the export of agricultural goods in June 2021 remained around the same values recorded in June 2020 amounting to US dollars 1,259 million, with a growth of 21.2% from the same period in 2020 while earnings from tea exports increased.
Earnings from mineral exports were higher in June 2021 than in June 2020 with increases in earnings from earths and stone as well as ores, slag and ash.
The export volume and unit value indices increased by 8.9% and 3.4%, respectively, on a year-on-year basis in June 2021. Expenditure on merchandise imports increased by 57.2% to US dollars 1,659 million compared to US dollars 1,055 million recorded in June 2020. However expenditure on petroleum imports was low due to low import volumes during June 2021.
Expenditure on the importation of both food and beverages and non-food consumer good categories increased substantially in June 2021 compared to a year ago. Expenditure on food and beverages increased by 61.9% to US dollars 165.0 million with a broad-based increase in all categories, except seafood.
Expenditure on importation of intermediate goods in June 2021 increased by 48.5% over June 2020, despite the 40.0 per cent decline in the expenditure on fuel. Expenditure on fuel declined due to non-importation of crude oil and low import volumes of other types of petroleum, taking into consideration the availability of sufficient stocks.
Expenditure on importation of investment goods increased by 81.1% in June 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. Workers’ remittances declined in June 2021 compared to June 2020 to US dollars 478 million, recording a year-on-year decline of 16.4% in June 2021.
Gross official reserves stood at US dollars 4.1 billion at the end of June 2021, which provided an import cover of 2.6 months.
Sri Lankan rupee depreciated by 0.8 per cent against the US dollar during the month. During the year up to 13 August 2021, the rupee recorded a depreciation of 6.8% against the US dollar.