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Sri Lanka’s external sector further strengthened in June 2019

Sri Lanka’s external sector further strengthened in June 2019

Sri Lanka’s external sector has reportedly strengthened further in June 2019 with a marked contraction in the trade deficit while gross official reserves were augmented with the proceeds of the issuances of two international sovereign bonds (ISBs).
In June 2019, the trade deficit narrowed to US$ 316 million, the lowest since October 2010, the local media reported.
The reduction has been attributed to the decline in import expenditure by 23.1 per cent (year-on-year) and an increase of export earnings by 5.8 per cent (year-on-year).
Earnings from tourism has reportedly picked up in June, gradually recovering from the impact of the Easter Sunday attacks in April. Earnings from tourism had increased by 66.8 percent in June 2019 in comparison with May 2019.
Meanwhile, workers’ remittances at US 537 million in June 2019 have reportedly recorded a growth of 2.5 per cent (year-on-year). On a cumulative basis, workers’ remittances have amounted to US$ 3,270 million during the first half of 2019.
With the proceeds of the issuance of the ISB, gross official reserves have increased to US$ 8.9 billion at end June 2019, which was equivalent to 5.2 months of imports.
Also, earnings from merchandise exports have increased for the 28th consecutive month in June 2019 and have recorded an increase of 5.8 per cent (year-on-year) to US$ 1,084 million, mainly supported by an increase in industrial exports.
Earnings from industrial exports have reportedly increased in June2019 mainly due to the improved performance in textiles and garments, rubber products and transport equipment.
According to local media reports, the export volume index in June 2019 has increased by 6.4 per cent (year-on-year).

OSL take:

Sri Lanka’s external sector performance is an indication of the country’s overall economic performance. Hence the strengthening of the external sector is indicative that the country is on the right path, economically. Foreign businesses/investors could confidently explore business/investment opportunities in Sri Lanka, especially in the export sector. Sri Lanka’s geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed by Sri Lanka have placed the country in an advantageous position when it comes to the export sector.

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Article Code : VBS/AT/28082019/Z_7

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