ECONOMYNEXT – Sri Lanka’s exports fell 0.2 percent to 977 million dollars in October 2019 from a year earlier mainly due to falling commodity prices, while imports also fell 3.5 percent despite a pick up in vehicle imports by state workers amid weak credit.
Agricultural exports fell 3.3 percent to 201.3 million dollars in October, coconut products exports fell 8.0 percent to 26.3 million US dollars, central bank data showed.
Seafood exports also fell 17 percent to 19.2 million US dollars amid weak demand, the central bank said.
Imports in October had fallen 12.6 percent amid weak credit, after last year’s currency collapse.
Intermediate products imports grew 2.2 percent to 1,040.2 million US dollars.
Petroleum products were up 15.9 percent to 308 million US dollars and there were zero gold imports compared to half a million US dollars brought in 2018.
In 2018 the rupee started to collapse just as gold imports were halted with taxes as the central started to print money.
Investment goods were down 8.2 percent to 391 million US dollars with machinery and equipment down 6.5 percent to 218.2 million US dollars.
Vehicles imports were down from last year, but the central banks said volumes were starting to pick up with state workers using tax slashed permits to import cars.
In Sri Lanka the elected ruling class who make law gets tax free cars, state workers who implement laws get tax slashed cars while ordinary less priviledged citizens pay up to 270 percent in taxes for cars and motorcycles.
The trade deficit was down to 838 million US dollars from 903 million US dollars amid an overall credit contraction and economic slowdown as well as weaker tourism receipts which tends to reduce incomes to import.
In the first 10 months of the year exports were up 0.8 percent to 9,960 million US dollars, imports were down 12.4 percent to 16.4 billion US dollars and the trade deficit was down 20 percent to 2.8 billion US dollars.
Sri Lanka has a trade deficit because people exports services outside the merchandise account and earn dollars to spend, such as through remittances (labour exports), tourism (leisure services exports) and software.
Tourism earnings were estimated to have falle 20 percent to 2.8 billion US dollars in the first 10 months of the year.
The government is also usually a net borrower abroad, financing a part of the budget deficit with loans from China and other, which is a key driver of imports and the trade deficit.
Foreign direct investments also tend to boost imports when buildings or factories are built. (Colombo/Dec14/2019)