COLOMBO, Sri Lanka, Aug 14 (ePRESS) — Sri Lanka’s external sector remains stable despite a widening trade deficit, supported by strong tourism earnings, steady remittances, and healthy reserves backed by IMF assistance, the Monthly Economic Watch for August by First Capital Research said.
The report noted that the economy expanded by 4.8% in the first quarter of 2025, driven by robust private sector credit growth and easing monetary conditions. Foreign reserves rose by USD 64 million in July to USD 6.14 billion.
Private sector credit increased by LKR 222.1 billion in June, while state credit also climbed by LKR 45.8 billion, continuing the upward trend seen in previous months.
Exports in June grew 6% year-on-year (YoY), led by agricultural and industrial goods, with the latter rising 6.4% YoY. Imports jumped 16.3% YoY, with all categories increasing. Consumer goods surged 69.7%, mainly from higher non-food items.
The Central Bank’s Monetary Policy Board kept its key Overnight Policy Rate unchanged at 7.75% at its July 22 meeting, saying the stance would help guide inflation to the 5% target while supporting growth.
Inflation eased further, with July’s month-on-month rate at -0.2%, down from +0.9% in June. Food inflation dropped to -2.5% from +1.8% in June, while non-food inflation edged up to +1.0% from +0.4%. The annual inflation rate stood at -0.3% in July, improving from -0.6% in June.
