Macroeconomic Forecast Sri Lanka

The latest trade reading for August showed the country's trade deficit rising to US$885.5mn from US$819.4mn in July. While the monthly figure remains below the US$931.9mn peak in May, the year-to-date (January-August) deficit is still significantly wider at US$6.0bn, compared to US$3.4bn for 2010. On a year-on-year basis, import growth has continued to outpace that of exports for the sixth consecutive month, with the import bill and exports earnings expanding by 66.5% y-o-y and 19.1% y-o-y respectively. August's trade figures pose upside risk on our end-2011 deficit forecast of US$8.4bn.

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