Sri Lanka’s trade deficit widens in March due to high domestic demand

May 30, Colombo: Sri Lanka’s expenditure on imports surpassed the earnings from exports widening the trade deficit by 101.5 percent to $632.4 million IN March, figures released Monday by Economic Research Department of Sri Lanka’s Central Bank showed.

Both earnings from exports and expenditure on imports have grown significantly on a year-on-year basis in March 2011, the Central Bank said today.

Earnings increased from all major categories of exports in March 2011 to USD 1.057 billion, a 59.5 percent, year-on-year increase while expenditure on imports increased by 73.0 percent to USD1.689 billion, resulting in a trade deficit of USD 632.4 million for the month.

During the first quarter of 2011, the cumulative earnings from exports and expenditure on imports have increased by 54.3 percent to USD dollars 2.721 billion and 39.9 percent to USD 4.458 million, respectively, the Bank noted.

According to the report, the largest contribution to the growth in exports in March 2011 was from the industrial sector, led by significant increases in exports of textile and garments.

All major categories of imports also increased in March 2011, reflecting higher prices in the international market and higher domestic demand.

However, during the month, workers’ remittances also increased by 34.9 percent to USD 503 million over that of 2010.

The gross official reserves continued to remain above the targeted level at USD 7.2 billion by end April 2011, sufficient for 5.6 months of imports, the Central Bank reported.

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