Sri Lanka imports collapse 44 percent in May, after lockdowns, Nixon’s shock
ECONOMYNEXT – Sri Lanka’s imports have collapsed 44.3 percent to 994 million US dollars amid after Coronavirus lockdowns which hit consumption and Nixon’s shock style import controls after the rupee collapsed in March and April amid money printing.
Sri Lanka’s exports also fell 39 percent to 587 million US dollars, recovering from a 64 percent fall to 282 million US dollars in April, central bank data showed as lockdowns were eased and external demand picked up.
In the absense of money printing falling exports also lead to an equivalent fall in imports as former recipients of exports find their spending power slashed.
After printing unprecedented volumes of money in March and April and the rupee was allowed to fall to close to 200 to the US dollar under a ‘flexible exchange rate’ triggering panic among importers who covered bills early, Sri Lanka then slammed Nixon’s shock style import controls not seen since the 1970s.
Sri Lanka also slammed import controls after money was printed in 2018 without any Coroanvirus crisis.
The April trade balance fell to 407 million dollars from 823 million dollars a year earlier.
Sri Lanka also reported zero tourism revenues in May which will also reduce imports in the future. Gross inflows to the government fell to 111 million US dollars from 141 million a year earlier.
In the five months to May exports were down 28.4 percent to 3,519 million US dollars, and imports were down 19.2 percent to 6,619 million US dollars.
The trade balance was down to 3,100 million US dollars from 3,218 million dollars. (Colombo/July14/2020)