Sri Lanka’s trade deficit continues to improve

Sri Lanka’s trade deficit continues to improve

23 August 2019 03:34 pm

Sri Lanka’s trade deficit continued to improve during the first half of 2019 with the sustained growth of exports and the notable contraction in the growth of imports. 

The deficit in the trade account narrowed significantly in June 2019 in comparison to the corresponding month of 2018 mainly due to the reduction in imports of motor vehicles and fuel, Central Bank announced. 

On a cumulative basis, the deficit in the trade account contracted by US dollars 2,112 million to US dollars 3,597 million during the first six months of 2019 in comparison to the corresponding period of 2018. 

Meanwhile, the terms of trade, which represents the relative price of imports in terms of exports, improved by 3.6 per cent (year-on-year) to 114.0 index points in June 2019 as export prices, on average, reduced at a slower pace than the decline in import prices. 

However, on a cumulative basis, the terms of trade deteriorated by 1.5 per cent during the first six months of 2019 in comparison to the corresponding period of 2018.

In June 2019, the trade deficit narrowed to US dollars 316 million, the lowest since October 2010. 

This considerable reduction was due to the decline in import expenditure by 23.1 per cent (year-on-year) and an increase of export earnings by 5.8 per cent (year-on-year).