Sri Lanka’s external sector performance improved in September 2016 with a contraction in the trade deficit and continued growth in tourist earnings. The trade deficit in the month of September narrowed as a result of the increase in export earnings together with a reduction in import expenditure. Although worker’s remittances recorded a marginal decline, earnings from tourism increased during the month in comparison to that of September 2015. Furthermore, foreign investments at the CSE and government securities market as well as the long term loan inflows to the government supported to strengthen the financial account during September 2016.

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According to the provisional estimates of the Department of Census and Statistics (DCS), the Sri Lankan economy is estimated to have grown by 4.1 per cent during the third quarter of 2016 compared to the growth of 5.6 per cent in the corresponding period of the previous year. Services activities grew by 4.7 per cent, while Industry activities grew notably by 6.8 per cent during the third quarter of 2016. However, Agriculture related activities continued to report a contraction, for the second consecutive quarter, by 1.9 per cent, impacted by the adverse weather conditions that prevailed during the third quarter of 2016. Favourable developments in leading economic indicators as well as the lower base in the fourth quarter of 2015 are likely to steer economic growth upwards in the final quarter of 2016 in spite of the effect of adverse weather conditions and global economic uncertainties.