Sri Lanka’s merchandise exports show 8.1% y-o-y growth in March
The Morning: Sri Lanka’s merchandise exports posted an 8.1% year-on-year (y-o-y) growth in March, reaching $ 1.24 billion, according to the latest Central Bank data.
However, the trade deficit widened to $ 395.6 million, as import growth outpaced exports, rising 8.6% y-o-y to $ 1.64 billion.
The export sector has remained a key driver of economic recovery, with cumulative export earnings for Q1 2025 reaching $ 3.35 billion, a 5.3% increase compared to the same period last year. Key contributors included apparel, tea, and rubber products, which continue to benefit from improved global demand and preferential trade agreements.
Despite this growth, challenges persist. Import expenditure surged by 11.1% in Q1 2025, driven by higher fuel and intermediate goods costs. The terms of trade improved marginally in March, as import prices fell faster than export prices, but rising volumes kept import bills elevated.
IT/BPO services grew by 6.8% y-o-y in March, according to the data published.
Meanwhile, foreign investments in government securities saw a net inflow of $ 49 million, signalling cautious optimism among international investors.
With gross official reserves at $ 6.5 billion, covering four months of imports, Sri Lanka’s external sector remains fragile.
OSL take:
Sri Lanka’s manufacturing industry has shown resilience and strength by recording a continuous growth in the industry even amidst an economic crisis faced by the country in 2022. The growth recorded by the local merchandise exports sector also indicates an overall expansion in Sri Lanka’s economic activities. The strong trade ties enjoyed by Sri Lanka with many foreign countries, the country’s target of becoming a regional hub and the many incentive schemes offered to exporters by the Sri Lankan government have all helped boost the merchandise exports sector. Given all these factors and the growing business potential in Sri Lanka’s manufacturing and exports sectors, foreign businesses/investors could confidently explore the expanding business/investment opportunities in these sectors. The growth, profits and overseas expansions being posted by local businesses in the manufacturing and export sectors indicate the lucrative nature of businesses in Sri Lanka’s manufacturing and exports sectors. Foreign businesses/investors while exploring the many business/investment opportunities in Sri Lanka’s manufacturing and exports sectors, could also look at expanding operations locally and internationally through partnerships or joint ventures with local businesses in these sectors.
| Article Code : | VBS/AT/20250507/Z_2 |