SL External Sector: Q1 Surplus Held Amidst Regional Tensions 📈

Sri Lanka recorded a cumulative current account surplus of US$ 531 Mn for Q1 2026, though rising fuel costs and geopolitical volatility in the Middle East pressured the trade balance and tourism. • Trade & Imports: The merchandise trade deficit widened to US$ 2.3 Bn in Q1. This was driven by a 74.7% YoY surge in fuel import expenditure (US$ 630 Mn in March alone) and US$ 195 Mn in vehicle imports. • Tourism: The sector saw a sharp 42.4% decline in its March surplus. Monthly arrivals fell 19.8% YoY to 183,979, with Q1 earnings dropping 15% compared to 2025 due to regional conflict deterrents. • Remittances: Inflows from migrant labor remained a vital pillar, growing 17.5% in March to US$ 815 Mn. Cumulative Q1 remittances saw a robust 26.5% increase, totaling US$ 2.3 Bn. • Reserves & Currency: Gross Official Reserves stood at US$ 7.0 Bn at end-March, slightly dipping due to external debt servicing. The Sri Lankan Rupee depreciated by 2.9% against the US Dollar by late April 2026. _Source: Central Bank of Sri Lanka (Provisional Data)_