The deficit in the merchandise trade account widened to US dollars 541 million in January 2024 from US dollars 445 million recorded in January 2023, mainly with higher increase in imports.
In addition, trade deficit in January 2024 widened compared to the deficit of US dollars 487 million in December 2023.
Earnings from merchandise exports recorded a marginal decline of 0.8 per cent to US dollars 971 million in January 2024 compared to US dollars 978 million in January 2023.
A decline in earnings was observed in industrial exports and mineral exports, while agricultural exports increased in January 2024. The decline in industrial goods exports in January 2024 compared to January 2023 was mainly contributed by garments, resulting from lower exports of garments to most major markets.
However, earnings from petroleum products increased due to the increase in volumes of bunkering and aviation fuel exports. Earnings from the exports of agricultural goods improved in January 2024, compared to a year ago, mainly contributed by minor agricultural products, coconut related products, and tea.
Meanwhile, earnings from mineral exports declined due to the base effect of higher exports of zirconium ores in January 2023.
Expenditure on merchandise imports increased by 6.2 per cent to US dollars 1,512 million in January 2024 compared to US dollars 1,423 million in January 2023.
The increase in expenditure on consumer goods and investment goods partly driven by the relaxation of import restrictions contributed to this increase.
The increase in the expenditure on consumer goods imports in January 2024 compared to a year ago was resulted by a broad-based increase in expenditure on both food and non-food consumer goods.
Meanwhile, expenditure on intermediate goods imports declined driven by lower fuel imports partly owing to higher hydro power generation. In contrast, expenditure on base metals increased notably while expenditure on textiles and textile articles imports also increased.Expenditure on investment goods increased mainly driven by higher imports of machinery and equipment while expenditure on building material imports also increased, owing to higher iron and steel imports.
Terms of trade, i.e., the ratio of the price of exports to the price of imports, deteriorated by 3.6 per cent in January 2024 compared to January 2023, as the decline in the prices of exports surpassed the decline in the prices of imports.
The export volume index increased by 4.4 per cent, while the unit value index declined by 4.9 per cent, implying that the marginal decline in export earnings in January 2024 can be attributed to the lower export prices.
Meanwhile, the import volume index improved by 7.7 per cent, while the unit value index declined by 1.4 per cent, implying that the increase in import expenditure in January 2024 was driven by the volume effect.