Trade deficit narrows further in July

Sri Lanka’s trade deficit narrowed by US $ 509 million in July 2020 to US $ 209 million, from US $ 717 million in July 2019, as exports increased while imports recorded a decline.

Also, on a cumulative basis, the trade deficit narrowed by US $ 844 million to US $ 3,370 million during the first seven months of 2020, from US $ 4,314 million in the corresponding period of 2019.

A significant decline in oil imports, personal vehicles, machinery and equipment, building materials and textile and textile articles, was the main contributory factor towards the narrowing of the trade gap in the first seven months of the year.

Earnings from merchandise exports topped the US $ 1 billion mark in July, first time since January 2020, to US $ 1,085 million, with the gradual recovery of both domestic and global supply and demand chains and efforts by the government to support the export industries. This positive growth observed for the first time since February 2020 emanated from increased earnings from all three major categories of exports, namely, agricultural, industrial and mineral exports.

The year-on-year (YoY) declining trend observed in expenditure on merchandise imports since March 2020 continued in July 2020 as well, recording a decline of 24.6 percent to US $ 1,294 million.

The expenditure on all major import sectors declined in July 2020. This reduction is partly attributed to the measures taken by the government to restrict the importation of selected non-essential goods.

The import expenditure on personal vehicles in July fell 94 percent YoY to US $ 6.1 million while the oil import bill fell 36 percent YoY to US $ 200 million.