ECONOMYNEXT – A sharp fall in imports and weak export growth led to a significant narrowing of Sri Lanka’s trade gap in April 2019 to 797 million US dollars from 999 million US dollars in April 2018, the central bank said.
Import expenditure fell by 11 percent to 1.6 billion US dollars in April 2019 from a year ago while export growth rose only by 0.4 percent to 798 million dollars, a statement said.
Garment exports grew 5.3 percent to 334 million dollars while food, beverages and tobacco exports fell along with machinery and mechanical appliances exports.
Tea exports fell almost 10 percent to 99 million dollars.
Expenditure on merchandise imports declined by 11.0 percent to 1,596 million US dollars in April 2019 from a year ago, down for the sixth consecutive month.
“This decline was mainly due to lower imports of consumer goods and intermediate goods, particularly gold and fuel, despite an increase recorded in investment goods imports,” the statement said.
Import expenditure on consumer goods declined significantly in April 2019, mainly due to lower imports of non-food consumer goods, particularly personal motor vehicles.
Import expenditure on personal motor vehicles continued to decrease significantly since December 2018.
This was owing to the reduction in importation of motor cars with less than 1000 cc engine capacity, hybrid and electric motor vehicles reflecting the lag effect of policy measures introduced on importation of vehicles during the second half of 2018.
Sri Lanka’s private credit had been flat or falling, which tends to reduce imports. In the absence of a credit collapse, if one good is discouraged (such as cars) money and credit will be diverted to other goods, to keep total imports up, especially if money is printed.
This is why Sri Lanka had balance of paymetns crisis in 2015 despite collapsing global oil prices. (COLOMBO, 18 June 18, 2019)