April trade gap narrows amid decline in imports

• April trade gap contracts to US $ 797mn from US $ 999 mn a year ago 
• Merchandise imports down 11% in April amid lower oil bill, car imports
• Exports up by marginal 0.4% on higher garment exports; agri exports down

Sri Lanka’s trade balance in April contracted to US $ 797 million from US $ 999 million a year ago, as import expenditure fell for the sixth consecutive month and export income increased marginally. 
The cumulative trade gap for the first four months of the year also fell to US $ 2, 458 million from US $ 3, 921 million 
a year ago.
The expenditure on merchandise imports in April fell 11 percent year-on-year (YoY) to US $ 1, 596 million as both consumer goods imports and intermediate goods imports fell during the month.
Consumer goods imports fell 26.6 percent YoY to US $ 308.1 million with rice imports falling 98.8 percent YoY to US $ 0.7 million with the increase in rice availability in the 
domestic market.
Non-food consumer goods imports also fell over 35 percent YoY led by a decrease in personal vehicle imports which fell 69.9 percent YoY to 
US 47.6 million.
“Import expenditure on personal motor vehicles continued to decrease significantly since December 2018, owing to the reduction reported in the importation of motor cars with less than 1000 cc engine capacity, hybrid and electric motor vehicles reflecting the lag effect of policy measures introduced on the importation of vehicles during the second half of 2018,” the Central Bank said.
Imports of intermediate goods decreased in April particularly due to lower gold and 
fuel imports.
Expenditure on gold imports, which started to decline since May 2018 following the imposition of customs duty on gold in April 2018, stagnated at a negligible level in April 2019 as well.Sri Lanka’s fuel bill, which consists of crude oil, refined petroleum and coal fell 9.7 percent YoY to US $ 295 million amid lower importation of coal and refined petroleum. 

Investment goods imports during April however edged up 2.4 percent YoY to US $ 404.1 million with a 61.1 percent YoY increase to US $ 92.6 million in transport  equipment imports. 
The cumulative imports in the first four months of the year fell 17.4 percent YoY to US $ 6, 412.5 million.
Meanwhile, earnings from Sri Lanka’s limited export basket edged up by a marginal 0.4 percent as agricultural exports fell 7 percent YoY to US $ 177 million. Tea exports in April fell 9.7 percent YoY to U S $ 177 million, while seafood exports also edged down 0.6 percent YoY to US $ 22.7 million.
Industrial exports in April rose 2.7 percent YoY to US $ 617.6 million as textile and garments exports rose 5.6 percent YoY to US $ 357.6 million.
Export of rubber products, which mainly consist of rubber tyres, fell 4.4 percent YoY to US $ 55.3 million.
Ceramic products exports rose 29.9 percent YoY to US $ 2.1 million while gems, diamonds and jewellery exports rose 32 percent YoY to US $ 23 million. 
The cumulative export income for the first four months of the year rose 4.5 percent YoY to US $ 3, 954.2 million. 

Tourism earnings down; remittances edge up

Among the other major inflows to the current account, earnings from tourism declined in April due to the Easter Sunday terrorist attacks on April 21.

The earnings from tourism were estimated at US $ 313 million in April while the cumulative earnings for the first four months of the year stood at US $ 1, 704 million.

Tourists arrivals in April fell 7.5 percent YoY to 166, 975.

Meanwhile, workers’ remittances in April recorded a growth of 2.3 percent YoY to US $ 554 million. On a cumulative basis, workers’ remittances amounted to US $ 2,171 million during the first four months of the year.

Foreign investments to the government securities market recorded a net outflow of US $ 79 million in April 2019.

On a cumulative basis, net outflows to the government securities market amounted to US $  27 million during the first four months 

of the year. Foreign investments in the Colombo Stock Exchange (CSE), including primary and secondary market transactions, recorded a net inflow of US $ 10 million during the month of April. On a cumulative basis, the CSE recorded a net outflow of US $ 24 million.

Long-term loans to the government recorded a net inflow of US $ 35 million during April 2019.