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Sri Lanka exports to fall 36-pct to US$7.5bn in 2020 on Coronavirus economic hit

ECONOMYNEXT – Sri Lanka’s merchandise exports are projected to fall 36 percent to 7.5 billion US dollars in 2020, with services exports to fall 24 percent as Coronavirus devastates customer markets abroad and production at home, officials said.

Sri Lanka’s Export Development Board is projecting exports of goods and services to fall to 10.75 billion dollars in 2020, Chairman Prabash Subasinghe told an online forum organized by Advocata Institute, a Colombo-based think tank.

This year’s goods and services exports would be down 33.7 percent from a provisional 16.1 billion US dollars in 2019, and down 41 percent from an originally projected 18.5 billion dollar at the beginning of 2020.

Merchandise exports projected for 7,531 million dollars after Coronavirus would be down 44 percent from an original forecast of 13.5 billion US dollars.

Sri Lanka’s apparel exports are expecting to lose 1.5 billion US dollars in the March to June quarter and is among the worst hit, Sri Lanka Apparel Exporters Association has said.

Many smaller firms in the sector would not be able to pay salaries from April officials have warned.

But food sectors such as tea and seafood are seeing strong orders.

Sri Lanka rubber gloves production had orders and solid rubber tyres which is own company was involved was also shipping goods out.

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The export fall comes as Sri Lanka’s central bank is printing money to push up excess liquidity and generate monetary instability.

The International Monetary Fund has said Sri Lanka’s economy could shrink 0.5 percent in 2020, but would recover in 2021 along with other South Asian nations.

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With export revenues down (leaving less money from imports as purchasing power of domestic economic agents also fall in tandem) the excess liquidity is at the moment about 400 to 500 percent of normal, and is disproportionately higher to dollar flows now.

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Analysts had warned that the tendency of the Sri Lanka’s central bank to cut rates and inject liquidity with a soft-pegged exchange rate was likely to lead to monetary instability, currency falls, reserve losses, downgrades in 2020 before the crisis broke out. (Colombo/Apr21/2020)

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