Sri Lanka’s trade deficit widened in January 2020 compared to the same month last year, as earnings from exports declined while expenditure on imports increased, Central Bank announced.
Although the tourism industry rapidly recovered from the Easter Sunday attacks by end 2019, the COVID-19 outbreak reversed the recovering trend in January 2020.
Workers’ remittances recorded a year-on-year growth in January 2020. Meanwhile, foreign investment in the government securities market recorded a net inflow in January 2020 while a net outflow was observed from the CSE,CB said.
The Sri Lankan rupee remained broadly stable and appreciated against the US dollar in January 2020, but depreciated sharply in March in the face of the COVID-19 pandemic following a similar trend of many emerging market currencies due to strengthening US dollar and yen
The deficit in the trade account widened in January 2020 to US dollars 730 million, from US dollars 617 million in January 2019, led by a decline in exports and an increase in imports on a year on year basis.
Continuing the year-on-year declining trend observed since July 2019, earnings from merchandise exports declined by 3.2 per cent to US dollars 1,005 million in January 2020, with all major export sectors recording declines in comparison to January 2019.
Expenditure on Merchandise imports increased, on a year-on-year basis, in January 2020 for the second consecutive month, by 4.8 per cent to US dollars 1,735 million, driven by higher consumer and investment goods imports.
Expenditure on consumer goods imports increased in January 2020 with the increase in expenditure on both food and beverages and non food consumer goods imports.