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Sri Lanka : Sri Lanka trade deficit widens in December 2019 as exports decline, imports rise

Sri Lanka : Sri Lanka trade deficit widens in December 2019 as exports decline, imports rise

Feb 17, Colombo: Sri Lanka’s trade deficit widened in December 2019 Earnings from exports declined while expenditure on imports increased, the Central Bank reported Monday in its External Sector Performance review for the month.

Nevertheless, during the year 2019, the trade deficit contracted significantly, driven by a sharp contraction in import expenditure, the Central Bank said.

The trade deficit widened to US$ 784 million in December 2019 compared to the deficit of US$ 701 million recorded in December 2018.

However, on a cumulative basis, the trade deficit during 2019 contracted by US$ 2.346 billion to US$ 7,997 billion from US$ 10.343 million in 2018.

Earnings from merchandise exports declined 3.2 percent in December 2019 to US$ 1 billion compared with US$ 1.0335 billion in December 2018 with the decline in agricultural exports as well as industrial exports.

Earnings from textiles and garments declined 2.1% to US$ 483.2 million due to dampened demand from the EU and the USA, despite an increase recorded in exports to non-traditional markets such as Canada, Australia and China.

In December 2019, merchandise imports increased for the first time since October 2018, by 2.9 percent (year-on-year) to US$ 1.784 billion, driven by higher investment and consumer goods imports.

Expenditure on consumer goods imports increased in December 2019 with increases in both food and beverages and non-food consumer goods imports.

Earnings from tourism were estimated at US$ 454 million in December 2019, in comparison to US$ 475 million in December 2018. In cumulative terms, earnings from tourism were estimated at US$ 3.592 billion declining 20.5 percent during the year compared to US$ 4.381 billion in 2018.

Meanwhile, workers’ remittances recorded a growth of 13.8 percent in December 2019, year-on-year, amounting to US$ 665 million. On a cumulative basis, workers’ remittances recorded a decline of 4.3 percent, amounting to US$ 6.717 billion in 2019 compared to US$ 7.015 billion in 2018.

Foreign investment in rupee denominated government securities recorded a net outflow of US$ 100 million in December 2019, resulting in a cumulative net outflow of US$ 334 million in 2019.

During the month of December 2019, there was a net foreign outflow of US$ 5 million from the CSE, including primary and secondary market transactions. On a cumulative basis, the CSE recorded a net outflow of US$ 35 million in 2019.

The Sri Lankan rupee remained stable during 2019 and appreciated by 0.6 percent against the US dollar during the year. The currency appreciated by a further 0.1 percent against the US dollar during the year up to 17 February 2020.

The gross official reserves stood at US$ 7.6 billion by end December 2019, which was equivalent to 4.6 months of imports while total foreign assets consisting of gross official reserves and foreign assets of the banking sector amounted to US$ 10.4 billion at end December 2019, equivalent to 6.3 months of imports.