Trade deficit contracted in 2019 thanks to decline in import expenditure - CBSL

Colombo (News 1st): Earnings from exports declined in December 2019 while expenditure on imports increased during December, widening the trade deficit in the month of December but the trade deficit in 2019 contracted significantly, driven by a sharp decline in import expenditure, Central Bank said on Monday. The deficit in the trade account widened in December 2019 to 784 million US dollars, from 701 million US dollars in December 2018, led by a decline in exports and a growth in imports on a year-on-year basis. However, 2019 trade deficit contracted by 2.35 billion US Dollars to 7.99 billion US Dollars during 2019 from 10.34 billion in 2018. Workers’ remittances increased notably (year-on-year) in December 2019 helping to moderate the cumulative decline in 2019. The workers’ remittances recorded a decline of 4.3 percent, amounting to 6.7 billion US Dollars in 2019 compared to 7 billion US Dollars in 2018. Meanwhile, there was a notable outflow of foreign investment from the government securities market during December 2019 while marginal net outflows were also observed from the CSE. The Sri Lankan Rupee appreciated against the US Dollar during 2019 and remained stable thus far during 2020. A net outflow of foreign investment amounting to 334 million US Dollars, was recorded in the Rupee denominated government securities market in 2019. During the month of December 2019, there was a net foreign outflow of 5 million US Dollars from the CSE, including primary and secondary market transactions. On a cumulative basis, the CSE recorded a net outflow of US Dollars 35 million in 2019. Gross official reserves stood at 7.6 billion US Dollars at end December 2019, equivalent to 4.6 months of imports. While, total foreign assets consisting of gross official reserves and foreign assets of the banking sector amounted to 10.4 billion US Dollars at end December 2019, equivalent to 6.3 months of imports.