Strong Economic Resilience: Sri Lanka’s Rise in Remittances & Tourism

News Today: Sri Lanka’s increase in workers’ remittances and tourist earnings

In July 2024, Sri Lanka’s external sector demonstrated remarkable resilience, buoyed by significant increases in workers’ remittances and tourist earnings. Despite an expansion in the trade deficit, the country’s external financial landscape remains robust.

Workers’ remittances showed a notable rise, with net inflows increasing from USD 3,364 million in the first seven months of 2023 to USD 3,711 million in the same period of 2024. This growth highlights a monthly average exceeding USD 500 million for five consecutive months, reflecting strong overseas contributions to the country’s economy.

Tourist earnings also saw substantial improvement, reaching USD 1,885 million from January to July 2024. This figure represents a significant increase compared to USD 1,094 million during the same period in 2023. The growth in tourist revenue underscores the sector’s ongoing recovery and its crucial role in Sri Lanka’s economic stability.

Additionally, total inflows to the services sector, excluding tourism, were estimated at USD 337 million in July 2024, up from USD 311 million in July 2023. This increase was primarily driven by growth in computer and IT/BPO-related services and the sea transport sector, reflecting a diverse expansion in the services sector’s contribution.

However, foreign investments in government securities experienced a net outflow of USD 23 million in July 2024, contributing to a cumulative net outflow of USD 221 million from January to July 2024. This net outflow highlights a cautious approach by foreign investors in the government securities market.

Overall, the increased inflows from workers’ remittances and tourism have been instrumental in sustaining Sri Lanka’s external sector, offsetting some of the pressures from the trade deficit and investment outflows. These developments signal a positive trajectory in key economic areas, providing a buffer against external financial challenges.