Sri Lanka trade deficit widens in July; export earnings decline

hanjin-shipping-trade-exports

Sep 26, 2019 (LBO) – The trade deficit widened in July 2019 as exports fell more than the decline in imports, new data shows.

Export earnings recorded a decline of 7.0 percent (year-on-year) after a steady growth for several months while import expenditure declined by 2.2 percent (year-on-year) in July 2019, data from the Central Bank of Sri Lanka shows.

The decline in export earnings in July 2019 can be largely attributed to a reduction in earnings from petroleum products due to lower prices of bunker fuel and the export of a naval craft in July 2018, which resulted in a higher export base in the corresponding month of the previous year, the Bank said.

The trade deficit widened to US dollars 717 million in July 2019 compared to the deficit of US dollars 316 million recorded in June 2019.

The deficit in the trade account, which contracted significantly since November 2018, widened in July 2019, both on a year-on-year basis and month-on-month basis.

In cumulative terms, the deficit in the trade account contracted by US dollars 2,076 million to US dollars 4,314 million during the first seven months of 2019 in comparison to the corresponding period of 2018.

Meanwhile, the Central Bank says the terms of trade, which represents the relative price of imports in terms of exports, improved by 3.9 percent (year-on-year) as export prices, on average, reduced at a slower pace than the decline in import prices.

“However, on a cumulative basis, the terms of trade deteriorated marginally by 0.8 percent during the first seven months of 2019 in comparison to the corresponding period of 2018.”