Sri Lankaâ€™s November trade gap narrows, imports fall
ECONOMYNEXT – A sharp slowdown in spending on imports, especially cars, helped narrow Sri Lanka’s trade deficit in November 2018 from a year ago with exports growing by 4.1 per cent to 980 million US dollars, the central bank said.
Spending on imports contracted by 9.1 per cent in November 2018 to 1.77 billion dollars, a statement said.
“The deficit in the trade account narrowed significantly in November 2018 in comparison to November 2017 due to a sharp decline in import expenditure and a modest increase in export earnings.”
However, on a cumulative basis, the deficit in the trade account expanded during the first eleven months of 2018 to 9.64 billion dollars from 8.6 billion dollars in the same 2017 period.
Earnings from merchandise exports increased moderately by 4.1per cent (year-on-year) to 980 million dollars in November 2018.
“The growth in exports was driven by industrial exports while agricultural exports continued to decline,” the statement said.
Under industrial exports, export earnings from textiles and garments increased notably in November 2018 mainly driven by exports to the USA.
In addition, garment exports to non-traditional markets such as India, Canada and Australia as well as the EU market increased along with textile and other made up textile articles.
Earnings from agricultural exports fell during the month due to poor performance in almost all sub categories except the categories of unmanufactured tobacco and vegetables.
“Reflecting lower average export prices and exported volumes, export earnings from tea declined in November2018. Export earnings from spices also declined during the month due to the lower volumes in most categories of spices.”
The central bank said the growth in exports was driven mainly by the increased volume, rather than the price, compared to the volume and unit value indices in November 2017.
Expenditure on merchandise imports declined by 9.1 per cent (year-on-year) for the first time since June 2017 to 1,765million dollars in November 2018.
“The decline in consumer and investment goods contributed to the decline reflecting mainly the impact of restrictions on personal vehicles and non-essential consumer goods imports, while the relatively larger depreciation of the Sri Lankan rupee may also have contributed to curtailing imports.”
Expenditure on personal vehicle imports showed a significant decline of 34.8 per cent in November 2018 from the previous month, reflecting the impact of policy measures put in place to curtail personal vehicle imports.