Exports recover in Dec.; trade deficit shrinks by US $ 2bn

• Dec. export earnings at US $ 964.5mn, up from US $ 819mn in Nov.
• Cumulative exports in 2020 at US $ 10.1bn, down 15.6% from 2019
• Fuel bill falls by as much as US $ 1.3bn, a 35% saving compared to 2019
• Total import expenditure was US $ 16.1bn, a sharp 19.5% decrease from US $ 19.9bn in 2019

The export earnings recovered in December 2020 from the brief set back from the lockdowns set in since October, due to the second wave of COVID-19, as the gradual reopening of the key export markets in Europe and the United States is boding well for Sri Lankan manufacturers. 

The data showed merchandise export earnings increasing to US $ 964.5 million in December 2020, from US $ 819 million in November, though down 3.5 percent from December 2019. The cumulative export earnings for the year 2020 were recorded at US $ 10.1 billion, down 15.6 percent, from Rs.11.9 billion in 2019, due to the manufacturing and supply chain disruptions caused by the two waves of lockdowns in March and October. 

Meanwhile, the robust export earnings, relative to the challenges, combined with lower import expenditure, helped the country to narrow its trade deficit by as much as US $ 222 million in December alone and by US $ 2.0 billion for the full year.

In absolute terms, the trade deficit for December was recorded at US $ 562 million, down from US $ 784 million in the same month a year earlier, while for the 12 months, the trade deficit was US $ 5.9 billion, compared to US $ 7.9 billion in 2019.

Among four leading import commodities, which helped to narrow the trade deficit in 2020, were fuel, textile and textile articles, personal vehicles and building materials, while plastics and related articles, spices, food, beverage and tobacco and coconut remained the four key export commodities that buttressed the deficit. 

The fuel bill fell by as much as US $ 1.3 billion in 2020, a 35 percent saving compared to 2019. The ban on personal vehicles brought in a saving of US $ 533 million. 

The country’s total import expenditure in 2020 was US $ 16.1 billion, a sharp 19.5 percent decrease from US $ 19.9 billion in 2019. December imports fell 14.4 percent to US $ 1,527 million. 

Lower expenditure on exports was possible, due to the prolonged suspension on non-essential imports and also the lower global oil prices. But the price in the Brent futures exchange, the global benchmark, crossed the pre-pandemic high of US $ 60 a barrel this week. 

Meanwhile, some economic analysts are of the view that the government may not be able to restrict imports any longer, due to the resistance building up from home and abroad for open trade.