In March 2024, the merchandise trade account deficit in Sri Lanka narrowed to US dollars 369 million compared to US dollars 412 million in March 2023, attributed to a sharper increase in exports than imports. However, this improvement was offset by a widening deficit from February 2024, which stood at US dollars 319 million. The cumulative deficit for January to March 2024 was notably higher at US dollars 1,229 million compared to US dollars 896 million during the same period in 2023.
Earnings from merchandise exports saw a 9.8% rise to US dollars 1,139 million in March 2024, up from US dollars 1,037 million in March 2023. This increase encompassed all major export categories, with industrial exports, particularly petroleum products, contributing significantly due to increased volumes in bunkering and aviation fuel exports. Textiles and garments exports also saw a notable improvement. Agricultural goods exports, driven by higher volumes of tea and coconut-related products, also showed improvement, although spice exports declined. Mineral exports saw a slight increase.
On the import side, expenditure rose by 4.0% to US dollars 1,508 million in March 2024 compared to US dollars 1,450 million in March 2023. All major import categories saw an uptick, with intermediate goods, especially fuel imports, leading the increase. Consumer goods imports rose due to higher spending on food and beverages, offsetting a decline in non-food consumer goods like medical and pharmaceuticals. Investment goods imports increased broadly, fueled by higher imports of building materials and machinery.
The increase in import expenditure from February 2024 was mainly due to the normalization of fuel expenditure. Overall, while the narrowing trade deficit in March is a positive sign, the cumulative deficit for the first quarter indicates ongoing challenges in balancing Sri Lanka’s trade account.