Sri Lanka trade gap narrows in May 2019 after monetary instability
Wednesday July 17, 2019 20:16
ECONOMYNEXT- Sri Lanka’s trade deficit fell 11.8 percent in May 2019 to 823 million US dollars from a year earlier amid credit contraction and weak economic growth in the ake of monetary instability in 2018, official data showed.
Exports in May grew 4 percent to 961 million US dollars from a year earlier, despite collapse of the rupee from 153 to 176 over the last 18 months. Sri Lanka’s rupee has fallen the fastest since indepdence from Britain when most of South Asia and hte an exchange rate of 4.70 to the US dollar.
Garment exports grew 6.4 percent to 391.6 million US dollars, contributing most to the export growth.
The central bank said that there was higher demand for garment exports from traditional markets such as the US and EU, as well as non-traditional markets.
"Earnings from garment exports to the EU market increased by 9.5 per cent in May 2019 driven by high demand from the Netherlands, Ireland, Germany and the UK," the statement said.
Tea exports grew 3.6 percent to 125.6 million US dollars with increased volumes, despite falling prices in the global market.
"Export earnings from tea increased for the first time since April 2018 due to higher export volumes despite lower average export prices when compared with May 2018," the central bank said.
Meanwhile, imports fell 3.9 percent to 1.78 billion US dollars, continuing a declining trend for the seventh consecutive month.
Sri Lanka spent 332.5 million US dollars on consumer goods imports, 19.8 percent less from a year earlier, due to a fall in vehicle imports.
Personal vehicle imports fell 60.7 percent to 58.7 million US dollars, due to new taxes introduced in the 2019 budget, and a lag effect from import control measures introduced in 2018 but were phased out, the central bank said.
Food and beverage imports grew 4.9 percent to 332.5 million US dollars, helped by higher purchases of milk powder and canned fish.
Intermediate goods imports grew marginally in May for the first time since November 2018, mainly driven by higher fuel imports which were up 15.5 percent to 402.8 million US dollars.
"Import expenditure on fuel increased substantially due to higher import volumes of refined petroleum and coal despite lower average import prices."
"In contrast, expenditure on crude oil imports declined due to lower average prices as well as a marginal decline in the import volume."
Investment good imports grew 1.4 perent to 403.7 million US dollars, due to an increase in machinery and equipment and building material imports. (Colombo/Jul17/2019)