Notable improvement in external sector with rupee appreciating 10.3%

The external sector continued to record a notable improvement so far in 2024 compared to the corresponding period in 2023.

Services sector inflows (excluding tourist earnings) amounted to USD 311 mn in September 2024 compared to USD 319 mn in September 2023. Earnings from tourism in September 2024 amounted to US dollars 181 million, compared to US dollars 282 million in August 2024 and US dollars 152 million in September 2023.

Total inflows to the services sector, excluding earnings from tourism, were estimated at USD 311 million in September 2024 in comparison to US dollars 319 million in September 2023.

Workers’ remittances amounted to USD 556 million in September 2024, a slight moderation compared to USD 577 million in August 2024, but notably higher in comparison to US dollars 482 million recorded in September 2023. Monthly workers’ remittances have exceeded USD 500 million since March 2024.

Workers’ Remittances increased to USD 4,844 mn in Jan-Sep 2024 compared to USD 4,345 mn in the corresponding period in 2023.

The Sri Lanka rupee recorded a notable appreciation in the month of October 2024 in line with the overall appreciation observed so far during the year. The Sri Lankan rupee appreciated by 10.3% against the US dollar during the year up to October 30, 2024.

Meanwhile, reflecting cross-currency movements, the Sri Lanka rupee appreciated against other major currencies, such as the euro, the pound sterling, the Chinese Yuan, the Japanese yen, the Indian rupee, and the Australian dollar during the year up to 30 October 2024. The deficit in the merchandise trade account widened to US dollars 634 million in September 2024 from US dollars 377 million recorded in September 2023, driven by a relatively large expansion in import expenditure than that of export earnings.

Earnings from merchandise exports increased by 4.1% (y-o-y) to USD 1,012 million in September 2024. Industrial exports led to this increase while agricultural and mineral exports declined. Expenditure on merchandise imports recorded an increase of 22% (y-o-y) to USD 1,646 million in September 2024. Expenditure increased across all major import categories, with the largest increases in intermediate and investment goods.

Foreign investments in the government securities market recorded a net outflow of USD 5 million in September 2024 resulting in a cumulative net outflow of USD 256 million during January-September 2024.