Trade deficit widens in April; import expenses on personal vehicles up, no tourism earnings

Jun 22, 2020 (LBO) – Sri Lanka’s trade deficit widened in April 2020 to US dollars 840 million, from US dollars 797 million in April 2019, as the decline in exports exceeded the decline in imports.

Expenditure on merchandise imports declined notably, on a year on year basis, by 29.6 percent to US dollars 1, 123 million in April 2020 mainly led by the significant declines in intermediate and investment goods.

Expenditure on non-food consumer goods such as telecommunication devices, clothing and accessories and home appliances, which were mainly subjected to import restrictions imposed during March/April 2020 decreased in April 2020.

However, a considerable increase (27%) on import expenditure on personal vehicles was observed in April 2020 compared to the previous month mainly due to the clearing of the backlog accumulated due to service disruptions with the spread of COVID 19 in the country.

In comparison to April 2019, earnings from merchandise exports declined significantly by 64.6 percent to US dollars 282 million in April 2020 continuing the year on year decline observed in March 2020 with all major export sectors recording significant declines.

Earnings from the three major exports sectors; agricultural, industrial and mineral exports recorded significant contractions in April 2020.

Major export products such as textiles and garments (-81.8), rubber products (-54.2), petroleum products, gems, diamonds and jewellery, tea (-20.8), seafood and machinery and mechanical appliances mainly contributed to the decline in export earnings.

With some migrant workers returning to the country prior to the lockdown and reduced compensation and redundancies faced by some migrant workers abroad, a significant decline was recorded in workers’ remittances during the month.

Workers’ remittances declined by 32 3 percent in April 2020, year on year, amounting to US dollars 375 million.