The external current account recorded a deficit of US$142 million in July 2026, remaining in the deficit for the fourth consecutive month reflecting the impact of developments in the Middle East. Consequently, the cumulative current account recorded a deficit of US$ 387 million during January-July 2026, compared to a surplus during the corresponding period of 2025.
The merchandise trade deficit widened on a year-on-year basis in July 2026, driven by higher import expenditure and lower export earnings. Accordingly, the cumulative trade deficit widened to US$ 6.5 billion during January–July 2026, compared to US$ 3.9 billion in the corresponding period of 2025.
Monthly fuel import expenditure declined marginally from US$ 465 million in June 2026 to US$ 453 million in July 2026. However, expenditure on fuel imports increased by 68.0% (year-on-year) in July 2026, mainly driven by higher expenditure on crude oil imports. Cumulative fuel import expenditure amounted to approximately US$ 3,622 million during January–July 2026, recording a 59.9% (year-on-year) increase compared to the corresponding period of 2025.
Expenditure on motor vehicle imports, including both personal and commercial vehicles, amounted to US$ 241 million in July 2026. Meanwhile, cumulative expenditure on motor vehicle imports amounted to US$ 1,495 million during January–July 2026.
The terms of trade deteriorated on a year-on-year basis in July 2026, as import prices increased at a faster pace than export prices. Similarly, the terms of trade deteriorated during January–July 2026 compared to the corresponding period of 2025.
The services account recorded a surplus of US$ 244 million in July 2026, representing a year-on-year decline of 23.0%. However, the surplus increased by 50.7% compared with the previous month, mainly driven by higher tourism earnings. Reflecting the year-on-year continuous moderation in the monthly services account surplus, the cumulative services account surplus decreased by 22.4% to US$ 1.8 billion during January-July 2026.
Tourist arrivals declined marginally by 1.7% year-on-year in July 2026. Total arrivals during January-July 2026 amounted to 1,343,418, compared to 1,368,288 arrivals recorded during the corresponding period of 2025. Meanwhile, tourism earnings were estimated at US$ 286 million in July 2026, reflecting a 10.3% decline from a year earlier, while recording an 88.9% increase on a month-on-month basis. Cumulative tourism earnings during January-July 2026 declined by 11.5% to US$ 1.8 billion, compared to the corresponding period of 2025.
Workers’ remittances increased by 11.5% year-on-year to US$ 778 million in July 2026. Consequently, cumulative remittances during the first seven months of 2026 rose by 21.4% on year-on-year basis to US$ 5.4 billion.
Foreign investment in the government securities market recorded a notable net inflow of US$ 159.4 million, while foreign investment in the Colombo Stock Exchange (CSE), including both primary and secondary market transactions, recorded a marginal net outflow of US$ 6.3 million during the month of July 2026.
Gross official reserves (GOR), including the swap facility with the People’s Bank of China (PBOC), were recorded at US$ 6.6 billion by end July 2026, supported by foreign exchange purchases by the Central Bank.
By end August 2026, the Sri Lanka rupee depreciated by 5.5% against the US dollar on a year-to-date basis. Despite the overall depreciation, the Sri Lanka rupee appreciated somewhat in recent weeks, reflecting the impact of recently implemented monetary, fiscal and macroprudential policy measures.
