The external sector displayed a mixed performance in March 2018. Even though expenditure on imports continued to increase, exports which peaked to historic high levels in March 2018, contributed to a lower trade deficit vis-a-vis the previous two months of the year.
Earnings from tourism increased notably in March 2018 continuing the positive trend observed since January 2018. Workers’ remittances rose during the month reversing the decline recorded in February 2018. Meanwhile, the financial account of the Balance of Payments (BOP) experienced some outflows in March, particularly with the withdrawal of foreign investments from the government
The level of gross official reserves of the country remained at a healthy level. The expansionary trend in the trade deficit, observed during the first two months of the year, decelerated in March 2018 as export earnings grew at a higher rate than the growth in import expenditure. This resulted in a lower trade deficit for March 2018 in comparison to a trade deficit in excess of US dollar 1 billion observed in the recent past.
Merchandise exports in March at US dollars 1,108 million, recorded the historically highest monthly value. However, the year-on- year growth of export earnings in March 2018 moderated as the highest monthly export value for 2017 was recorded in March. Earnings from industrial exports mainly contributed towards the growth in export earnings.
Under industrial exports, earnings from garment exports recorded the highest value for a month since November 2013 mainly due to the increase in garment exports to the USA, despite a marginal reduction of exports to the EU.
Export earnings from gems, diamonds and jewellery increased significantly in March 2018 mainly owing to higher performance registered in gem exports. Increase in export of vegetable, fruit and nut preparations resulted in an increase in export earnings from food, beverages and tobacco.
Performance of Merchandise imports expenditure on imports increased in March 2018 to US dollars 1,979 million while the year-on-year growth moderated partly due to the base effect of high import expenditure in March 2017. Expenditure on intermediate goods followed by consumer goods contributed towards this increase in import expenditure during the month.
The level of gross official reserves of the country was estimated at US dollars 7.3 billion, equivalent to 4.1 months of imports, at end March 2018. Total foreign assets, including foreign assets of the banking sector, was estimated at US dollars 9.6 billion as at end March 2018 which was sufficient to cover 5.3 months of imports.