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Sri Lanka exports down 8-pct, imports down 18-pt in August 2020

ECONOMYNEXT – Sri Lanka’s exports were down 8.3 percent in August 2020 to 947 million dollars and imports fell 18.1 percent 1,298 million dollars amid a fall in tourism revenues and inflows to the government, official data shows.

Estimated tourism earnings were down to zero from 271 million rupees in 2019.

Inflows to the government were down to 114 million US dollars from 269 million dollars last year.

However worker remittances were up 28.2 percent to 664 million dollars.

The trade deficit fell to 342 million dollars in August 2020 from 541 million dollars a year earlier.

Trade deficits are caused by service account inflows such as remittances, while the current account deficit comes from the so-called ‘savings investment gap’ which is financed from abroad.

Sri Lanka’s private sector savings are positive and the deficit is usually driven by the foreign financing of the budget deficit, though it has no effect on the exchange rate.

When imports are expanded by money printing or credit financed by printed money foreign exchange shortages will occur if a soft-pegged exchange rate regime.

Sri Lanka has imposed severe import and exchange controls. In August there was an expansion of private credit, after contracting for several months.

Trade contractions are usually association with a weak or contracting economy.

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Apparel exports were down 11.9 percent to 440 million US dollars with export to the US and EU down through there was an increase in personal protective equipment.

Petroleum products were down 48 percent to 22 million US dollars, rubber products were down 2.5 percent to 71 million dollars. Though glove exports were up, tyre exports were down, the central bank said.

Tea exports were down 12 percent to 103 million US dollars coconut exports were up 20 percent to 33.9 million US dollars.

Consumer goods imports were down 31 percent to 332 million US dollars with dairy products down 39 percent to 23 million US dollars.

Vehicle imports fell to 1.3 million dollars from 76.7 million dollars, pharma imports were down 6.4 percent to 47.6 million dollars telecom devices were up 72 percent to 27 million dollars.

Fuel imports were down 8.4 percent to 791 million dollars and textile imports were down 16.7 percent to 194 million dollars. (Colombo/Oct10/2020)