The Impact of Macroeconomic Variables on Container Throughput in Sri Lanka: An ARDL Bounds Testing Approach

This study examines the impact of key macroeconomic variables on container throughput in Sri Lanka using annual time-series data from 1994 to 2023. This study focuses on understanding how changes in the exchange rate, GDP per capita growth, inflation, population growth, and trade balance influence the volume of containerised cargo moving in and out of a country. The Autoregressive Distributed Lag (ARDL) model was employed for the analysis. All variables were tested for stationarity using the Augmented Dickey-Fuller and Phillips-Perron unit root tests. The ARDL Bounds Test confirms the existence of a long-run relationship between macroeconomic variables and container throughput. The long-run estimation results indicate that GDP per capita growth, the exchange rate, inflation, and population growth are statistically significant at the 1% level, while the trade balance is significant at the 5% level. Among these, only inflation has a negative long-run effect. The error correction model (ECM) shows that 57% of the disequilibrium is corrected in each period, indicating a stable, long-run relationship. In the short run, GDP per capita growth, population growth, and lagged inflation have positive and significant effects on container throughput. The findings highlight that domestic macroeconomic performance plays a significant role in Sri Lanka’s containerised trade.