Tuesday, 02 June 2020 19:35

Sri Lanka trade deficit further narrows in March 2020

Sri Lanka trade deficit has further narrowed in March 2020 as imports fell more than the decline in exports.

The COVID-19 pandemic and the imposition of a partial lock down in Sri Lanka in the second half of March 2020 affected external sector performance in March 2020, Central Bank announced.

Breakdown in supply and demand chains along with the interruption of domestic production processes resulted in a notable decline in merchandise exports as well as merchandise imports.

However, with a greater decline in the expenditure on imports compared to the decline in earnings from exports, the trade deficit narrowed over the same period in 2019.

The deficit in the trade account narrowed in March 2020 to US dollars 549 million, from US dollars 592 million in March 2019, as the decline in imports in value terms exceeded the decline in exports.

However, on a cumulative basis, the trade deficit widened to US dollars 1,853 million during the first three months of 2020 from US dollars 1,661 million in the corresponding period of 2019.

Meanwhile, terms of trade, i.e., the ratio of the price of exports to the price of imports, improved by 25.7 per cent (year on year) in March 2020, due to the increase in export prices and decline in import prices.

Accordingly, all major exports sectors; agricultural, industrial and mineral exports have , recorded significant contractions in March 2020.

Major export products such as textiles and garments, tea, rubber products, gems, diamonds and jewellery, machinery and mechanical appliances, seafood and coconut mainly contributed to the decline in export earnings.

However, earnings from minor agricultural products exports recorded a growth during the month.

Expenditure on merchandise imports declined notably, on a year on year basis, in March 2020 by 30.3 per cent to US dollars 1,205 million, reversing the increasing trend observed since December 2019.



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