Earnings from merchandise exports declined in October 2022, on a year-on-year basis, for the first time since March 2022, mainly due to lower earnings from garments exports. The decline in import expenditure continued in October 2022, (y-o-y), for the eighth consecutive month, despite recording an increase, compared to September 2022. The merchandise trade deficit recorded a notable contraction in October 2022, compared to the previous year. Meanwhile, the workers’ remittances steadied and earnings from tourism improved in October 2022, whereby earnings from tourism crossed over USD 1 bn during January-October 2022, while workers’ remittances reached about USD 3 bn during January-October 2022. Foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded a marginal net inflow during October 2022. The Central Bank continued to provide forex requirement to finance essential imports, exhausting the liquid level of gross official reserves. Meanwhile, the weighted average spot exchange rate in the interbank market remained around Rs. 363 per US dollar during the month.
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External Sector Performance – October 2022
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CCPI based headline inflation decreased for the second consecutive month in November 2022
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) decreased to 61.0% in November 2022 from 66.0% in October 2022. Following a similar trend, the Food inflation (Y-o-Y) decreased to 73.7% in November 2022 from 85.6% in October 2022, while the Non-Food inflation (Y-o-Y) decreased to 54.5% in November 2022 from 56.3% in October 2022.
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The Central Bank of Sri Lanka maintains policy interest rates at their current levels
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 23 November 2022, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 14.50 per cent and 15.50 per cent, respectively, after considering the recent and expected developments in the domestic and global economy and macroeconomic projections. The Board noted that the maintenance of tight monetary policy stance is necessary to contain any demand driven inflationary pressures in the economy, while helping to further strengthen disinflation expectations, thus enabling to steer headline inflation towards the targeted level of 4-6 per cent over the medium term.
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NCPI based headline inflation decelerated to 70.6% in October 2022 on year-on-year basis reversing its increasing trend observed since October 2021
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) which followed an increasing trend since October 2021, declined to 70.6% in October 2022 from 73.7% in September 2022. Similarly, the Food inflation (Y-o-Y) decreased to 80.9% in October 2022 from 85.8% in September 2022, while Non-Food inflation (Y-o-Y) decreased to 61.3% in October 2022 from 62.8% in September 2022.
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SL Purchasing Managers’ Index (PMI) – October 2022
Manufacturing PMI declined in October 2022, indicating a contraction in manufacturing activities on a month-on-month basis. Accordingly, Manufacturing PMI recorded an index value of 38.4 in October 2022, with a decline of 4.2 index points from the previous month, driven by decreases recorded in all the sub-indices.
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Release of “Sri Lanka Socio Economic Data – 2022” Publication
“Sri Lanka Socio Economic Data – 2022”, the annually published data folder of the Central Bank of Sri Lanka, is now available for public information. The current data folder is the 45th volume of the series. -
The Central Bank publishes 'Recent Economic Developments: Highlights of 2022 and Prospects for 2023'
The Central Bank of Sri Lanka today published “Recent Economic Developments: Highlights of 2022 and Prospects for 2023”. The publication can be downloaded via the Central Bank Website in Sinhala, Tamil and English languages.
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External Sector Performance - September 2022
Earnings from exports remained robust in September 2022, while import expenditure declined for the seventh consecutive month, on a year-on-year basis, reflecting the significant reduction in imports of non-food consumer goods and investment goods. As a result, the merchandise trade deficit recorded a notable contraction in September 2022, (y-o-y). Workers’ remittances increased marginally in September 2022, (y-o-y). Earnings from tourism recorded an increase in September 2022, compared to the same period in 2021. Foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded a notable net inflow during September 2022. The Central Bank continued to provide forex liquidity to finance essential imports, exhausting the liquid level of gross official reserves.
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CCPI based headline inflation recorded 66.0% in October 2022, reversing its continued increasing trend observed since October 2021
Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) which followed an increasing trend since October 2021, declined to 66.0% in October 2022 from 69.8% in September 2022. Following a similar trend, the Food inflation (Y-o-Y) decreased to 85.6% in October 2022 from 94.9% in September 2022, while the Non-Food inflation (Y-o-Y) decreased to 56.3% in October 2022 from 57.6% in September 2022.
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Release of ‘Financial Literacy Survey Sri Lanka – 2021’ Publication
‘Financial Literacy Survey Sri Lanka - 2021’, a publication of the Central Bank of Sri Lanka, is now available for public access.
The Regional Development Department of the Central Bank of Sri Lanka, with the assistance of the International Finance Corporation (IFC) – under the IFC-DFAT Women in Work program – conducted the first ever countrywide Financial Literacy Survey in Sri Lanka, as part of the implementation of the National Financial Inclusion Strategy of Sri Lanka. The key objective of the survey was to assess the level of financial literacy across the population with a view to formulating appropriate policy measures.
The survey focused on the elements of knowledge, attitudes and behavior within the concept of financial literacy and this publication consists of the key survey findings.