Sri Lanka is relatively open to international trade, which accounts for 41% of GDP (World Bank, latest data available). Nonetheless, its share in GDP has declined almost continuously in the last 20 years after peaking at 88.6% in 2000. The country mainly exports textiles and garments (almost 40% of total exports in 2021), tea (13.7%), rubber products (8.8%), and electrical machinery (2.7%). Its main imports include mineral fuels (15.8%), machinery (8.5%), electrical machinery (8%), and knitted or crocheted fabrics (5.2% - ITC, 2022).
Sri Lankan exports are directed mainly towards the U.S. (24.7% of all exports), the United Kingdom (7.5%), India (6.7%), Germany (6.1%) and Italy (4.7%); whereas imports come chiefly from China (23.7% of all imports), India (22%), the U.A.E. (6.6%), Malaysia (3.8%) and Singapore (3.6%). The country’s trade policy aims to strengthen access to Sri Lankan products on the international market. As such, the Government has signed several bilateral and multilateral trade agreements, especially at the regional level. China and Sri Lanka have been negotiating a free trade agreement. However, while China has been pushing to reach a deal, Sri Lanka stated that they want more time to negotiate the agreement, as the Government is concerned about the economic impact of a rushed deal on its economy (Sri Lanka had demanded a review of the deal after 10 years, to which China did not agree). Therefore, negotiations are currently at a stalemate. For a list of FTAs signed by Sri Lanka, click here. Sri Lankan exports have been traditionally less competitive than those of other countries in the region such as Bangladesh and Vietnam due to higher minimum wage rates. Nevertheless, a rapid fall in the value of the Sri Lankan rupee and a minimum wage hike for the workers of the garment industry in Bangladesh and Vietnam helped to level the playing field.
Sri Lanka has a structural trade deficit. In 2021, merchandise imports reached USD 20.6 billion, while exports totalled USD 12.5 billion, marking an increase of 28.5% and 24.4%, respectively (WTO, 2022). The country is also a net service importer: in 2021, it imported USD 2.4 billion worth of services, against USD 2.9 billion in exports. According to the World Bank, in the same year, the country’s trade deficit widened to 7.4% of its GDP, from 6.1% one year earlier. The latest data from the Central Bank show that earnings from exports in 2022 surpassed USD 13 billion for the first time, recording an increase of 4.9% from the previous highest recorded in 2021. Meanwhile, total import expenditure amounted to USD 18.29 billion, recording a year-on-year decline of 11.4%, resulting from measures to restrict non-urgent imports and liquidity constraints that prevailed in the market for most of the year. As a result, the deficit in the trading account in 2022 narrowed to the lowest level since 2010 to USD 5.18 billion.
Foreign Trade Indicators | 2018 | 2019 | 2020 | 2021 | 2022 |
---|---|---|---|---|---|
Imports of Goods (million USD) | 22,233 | 19,937 | 16,055 | 20,637 | 18,291 |
Exports of Goods (million USD) | 11,890 | 11,940 | 10,047 | 12,499 | 13,107 |
Imports of Services (million USD) | 6,831 | 6,619 | 3,821 | 2,952 | 2,782 |
Exports of Services (million USD) | 8,374 | 7,474 | 3,035 | 2,475 | 3,062 |
Imports of Goods and Services (Annual % Change) | 3 | -4 | -20 | 4 | -20 |
Exports of Goods and Services (Annual % Change) | 5 | 2 | -30 | 10 | 10 |
Trade Balance (million USD) | -10,343 | -7,997 | -6,008 | -8,139 | -5,185 |
Foreign Trade (in % of GDP) | 50 | 49 | 37 | 41 | 47 |
Imports of Goods and Services (in % of GDP) | 28 | 28 | 22 | 24 | 25 |
Exports of Goods and Services (in % of GDP) | 21 | 22 | 15 | 17 | 21 |
Source: WTO – World Trade Organisation ; World Bank - Latest available data.
Main Customers (% of Exports) |
2022 |
---|---|
United States | 25.5% |
United Kingdom | 7.4% |
India | 6.7% |
Germany | 5.8% |
Italy | 5.0% |
Netherlands | 3.3% |
United Arab Emirates | 2.8% |
Canada | 2.8% |
Belgium | 2.4% |
France | 2.0% |
China | 2.0% |
Australia | 2.0% |
Japan | 1.8% |
Bangladesh | 1.7% |
Mexico | 1.5% |
Hong Kong SAR, China | 1.4% |
Israel | 1.4% |
Switzerland | 1.3% |
Singapore | 1.3% |
Iraq | 1.2% |
See More Countries | 49.6% |
Main Suppliers (% of Imports) |
2022 |
---|---|
India | 26.4% |
China | 20.0% |
United Arab Emirates | 5.5% |
Malaysia | 5.2% |
Singapore | 4.2% |
United States | 2.4% |
Russia | 2.1% |
Pakistan | 2.0% |
Indonesia | 1.9% |
Thailand | 1.8% |
Italy | 1.7% |
Germany | 1.7% |
Japan | 1.5% |
Hong Kong SAR, China | 1.5% |
Vietnam | 1.5% |
Saudi Arabia | 1.4% |
South Korea | 1.4% |
South Africa | 1.3% |
Oman | 1.3% |
United Kingdom | 1.2% |
See More Countries | 38.7% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
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3.1 bn USD of services exported in 2022 | |
---|---|
37.11% | |
Personal travelPersonal travel | 37.11% |
OtherOther | 40.82% |
35.83% | |
22.07% | |
3.00% | |
0.61% | |
0.60% | |
0.50% | |
0.30% |
1.0 bn USD of services imported in 2022 | |
---|---|
34.92% | |
25.57% | |
Personal travelPersonal travel | 25.57% |
OtherOther | 39.51% |
16.91% | |
10.12% | |
5.86% | |
3.82% | |
1.69% | |
1.11% |
Source: United Nations Statistics Division, Latest Available Data
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Latest Update: November 2023
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