Two consecutive monthly deficits narrow current account surplus in Oct.

Monday, 1 December 2025 04:16 - - {{hitsCtrl.values.hits}}

The external sector remained robust in the first 10 months of 2025, despite the current account registering a deficit for the second time this year in as many consecutive months in October.

The current account deficit in October was $ 199.5 million, deepening further from the $ 183 million deficit in September 2025.

According to the Central Bank of Sri Lanka (CBSL) External Sector Performance – October 2025 report, the cumulative current account remained in surplus year-to-date (YTD) end-October at $ 1.65 billion, a 7.1% increase from a year ago. However, the surplus has contracted from $ 1.9 billion for YTD end-September 2025, which was up 29% from $ 1.43 billion a year ago.

The YTD end-October surplus comes on moderate growth in merchandise and services exports and tourism earnings and higher worker remittances, according to the CBSL.

Merchandise trade dynamics continue to shift, with the trade deficit increasing in October 2025 to $ 1 billion, nearly doubling from $ 544 million a year ago, as imports growth out-paced exports.

Imports in October rose by 26.7% year-on-year (YoY) to $ 2.16 billion, while in the first 10 months, the growth was 13.8% to $ 17.55 billion. Exports fell 0.7% YoY to $ 1.15 billion in October, and up by 6.4% in the first 10 months to $ 11.4 billion.

The CBSL said that vehicle imports amounted to $ 261 million in October, with cumulative inflows rising to $ 1,465 million in the first 10 months of 2025.

The terms of trade deteriorated in October as import prices increased at a faster pace than export prices on a YoY basis.

Net inflows from services recorded a marginal increase, reaching around $ 3.1 billion during January to October 2025, up 2.6% from a year ago. The net inflow was up 14.9% YoY to $ 245 million in October 2025.

Tourist arrivals increased in October on both month-on-month (MoM) and YoY bases. Tourism earnings rose a marginal 0.3% YoY to $ 186 million during the month, and cumulative earnings for January to October recorded a 4.9% YoY increase to $ 2.66 billion.

Workers’ remittances posted the highest monthly inflow since December 2020. Cumulative inflows during January to October recorded a 20.1% YoY increase to $. 6.52 billion. Remittances were up 21.1% YoY to $ 712 million in October.

Foreign investment in Government securities continued to record net inflows in October, up 81.5% YoY to $ 70 million, while foreign investments in the Colombo Stock Exchange (CSE), covering both primary and secondary markets, recorded net outflows amounting to $ 18.7 million, compared to a $ 3.5 million net inflow a year ago.

Gross official reserves, including the swap facility with the People’s Bank of China, stood at around $ 6.2 billion by end-October.

The rupee recorded a 5% depreciation against the US dollar on a YTD basis by end-November.