external sector remained relatively stable in May 2019 as the year-on-year trade deficit continued to narrow significantly in May 2019, the Central Bank reported in its External Sector Performance review for the month.In May 2019, the deficit in the trade account narrowed to US$ 823 million, compared to US$ 933 million in May 2018.

The considerable reduction in the trade deficit in May 2019 was attributed to a notable decline in year-on-year (YOY) import expenditure by 3.9 percent and an increase of export earnings by 4.0 percent.Earnings from merchandise exports grew by 4.0 percent in May 2019 to US$ 961 million compared with US$ 924 million in May 2018 due to an increase in industrial and agricultural exports.

The growth in exports was driven by the improved performance in performance in textiles and garments and rubber product exports and earnings from agricultural exports also increased 3.0 percent.Expenditure on imports declined in May 2019 for the seventh consecutive month by 3.9 percent to US$ 1.784 billion from US$ 1.857 billion a year ago.

During the first four months of 2019, the cumulative deficit in the trade account contracted to US$ 3.281 billion from US$ 4.914 billion recorded in the corresponding period of 2018, as YOY export earnings increased by 4.4 percent while import expenditure declined by 14.8 percent.

Earnings from tourism in May declined by 70.8 percent to US$ 71 million, while during the first five months of 2019 tourism earnings declined by 7.1 percent to US$ 1.775 billion over the corresponding period of 2018. Earnings from tourism declined due to a drop in tourist arrivals following the Easter Sunday attacks on April 21.

Workers’ remittances decreased by 3.1 percent, year-on-year, to US$ 562 million in May 2019. On a cumulative basis, workers’ remittances declined by 11.8 percent to US$ 2.733 billion during the five months of 2019.Foreign investments in the government securities market recorded a net outflow of US$ 64 million in May 2019. On a cumulative basis, net outflows in the government securities market amounted to US$ 90 million during the first five months of the year

. The Sri Lankan rupee appreciated by 4.1 percent against the US dollar during the year up to 17 July 2019.The country’s gross official reserves stood at US$ 6.7 billion, which was equivalent to 3.9 months of imports at end May 2019.