Sri Lanka’s trade deficit widened by 69% in the first seven months of 2026, exceeding US$6.5 billion, as a sharp rise in import expenditure far outpaced the modest growth in export earnings, according to the Central Bank of Sri Lanka.
The figures are contained in the Weekly Economic Indicators report issued by the Central Bank’s Statistics Department on September 25. The trade deficit increased from US$3,850.1 million between January and July 2025 to US$6,506.9 million during the same period this year. Measured in rupees, the deficit rose 81.8%, from Rs1,148.5 billion to Rs2,088.1 billion.
The principal driver was a 25.8% increase in total import expenditure, which reached US$14,643.2 million during the January-July period. Imports of consumer goods increased by 28.2%, while intermediate goods rose 25.6% and investment goods by 23.0%. The Central Bank report also records a 56.0% increase in the price of imported crude oil per barrel, contributing significantly to the higher import bill.
Export earnings, by comparison, grew by only 4.4%. Several major export categories recorded declines. Agricultural export earnings fell by 0.8%, while earnings from textiles and garments, one of Sri Lanka’s principal export revenue sources, dropped by 6.4%.
The deterioration in external trade has occurred alongside weaker economic growth. Sri Lanka’s gross domestic product growth slowed from 5.0% in the second quarter of 2025 to 4.2% in the second quarter of 2026. The agricultural sector contracted by 2.3%, identified in the report as the main factor behind the slowdown. Tea and rubber production continued to decline from January to July, while coconut production also fell significantly.
Industrial production also weakened in several areas. According to the industrial production index, garment production declined by 13.4%, chemical and chemical-product manufacturing by 17.5%, and rubber and plastic-product manufacturing by 19.3%.
Tourism, another major source of foreign exchange, also failed to provide an increase in earnings. Tourism revenue fell 10.0% to US$2,061.1 million during January-August 2026, while tourist arrivals declined by 2.0% over the same period.
Financial conditions also showed changes during the period covered by the report. By September 25, the Sri Lankan rupee had depreciated 6.2% against the US dollar during the year, with the average selling price of the US dollar recorded at Rs334.81. The average weighted prime lending rate of commercial banks increased by 18 basis points to 10.94%, while interest rates in the call money market also rose.
The Colombo Stock Exchange recorded a slight decline in its All Share Price Index, while foreign investors showed a tendency to withdraw funds from the Sri Lankan equity market. Net foreign sales reached Rs193.33 million during the reported week.
Meanwhile, the central government’s total debt continued to increase. It rose from Rs29,994.69 billion at the end of 2025 to Rs30,795.04 billion by the end of May 2026. Foreign debt increased from Rs11,319.36 billion to Rs12,185.61 billion, while the volume of Treasury bills and bonds held by foreign investors declined by 4.5%, according to the Central Bank report.
