Nov 04, 2020 (LBO) - The Central Bank of Sri Lanka says the deficit in the trade account contracted by over US dollars 1 billion during the eight months ending August 2020 in comparison to the corresponding period of 2019.
Both exports and imports contracted during January to August 2020 compared to the same period in 2019, but the decline in the trade deficit was a result of the contraction in imports outpacing the contraction in exports.
The decline in expenditure on imports was US dollars 2,628 million while the decline in earnings from exports was US dollars 1,585 million between the said periods.
Accordingly, the trade deficit contracted to US dollars 3,812 million during the period under review from US dollars 4,855 million recorded in the corresponding period of 2019.
Earnings from export of merchandise goods recovered to pre-pandemic levels over the sharp drop observed in April 2020. Cumulative earnings from exports during the period from January to August 2020 recorded a reduction of 19.7 per cent to US dollars 6,445 million compared to US dollars 8,030 million of the corresponding period of 2019.
This reduction stemmed from the disruptions to domestic production of goods and trade related services during the lockdown period and disturbances to domestic and global demand and supply chains due to the COVID-19 pandemic.
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Earnings from industrial exports, which accounted for about 76 per cent of total exports, declined by 22.5 per cent on a yearon-year basis to US dollars 4,905 million during the eight months ending August 2020. Export earnings from textiles and garments mainly contributed to this decline, with a 23.6 per cent decline to US dollars 2,853 million.
Expenditure on the importation of intermediate goods, which accounted for around 55 per cent of total imports, declined during the eight months ending August 2020, with lower outlays recorded in most subcategories.
Accordingly, expenditure on intermediate goods declined by 22.9 per cent, year-on-year, to US dollars 5,692 million during the period under review.
Expenditure on fuel imports declined by 34.4 per cent to US dollars 1,691 million during January to August 2020, led by lower expenditure on crude oil and refined petroleum imports with lower prices that prevailed in the international market and lower import volumes.