Sri Lanka’s external sector the economy has been stabilised further in June 2020, with the gradual normalisation of domestic economic activity, Central Bank announced in its recent report.
The external sector of a country's economy refers to all international economic transactions between residents of the country (private and public sector) and the rest of the world.
The trade deficit declined in June 2020 (year-on-year), with a more than expected rebound in merchandise exports and notable reduction in merchandise imports on account of restrictions on non essential imports.
Workers’ remittances recorded a growth in June, for the first time since the outbreak of the COVID19 pandemic.
During the month, both the government securities market and the Colombo Stock Exchange (CSE) recorded some outflows.
Supported by the reduction in the trade deficit, the Sri Lankan rupee recorded a marginal appreciation during June 2020, Central Bank claimed.
The deficit in the trade account narrowed in June 2020 to US dollars 161 million, from US dollars 316 million in June 2019, recording the lowest monthly deficit since August 2009.
Also, on a cumulative basis, the trade deficit narrowed by US dollars 335 million to US dollars 3,262 million during the first six months of 2020 from US dollars 3,597 million in the corresponding period of 2019.
Earnings from merchandise exports rebounded sharply, recording US dollars 894 million in June 2020 compared to US dollars 587 million recorded in May 2020.
The declining trend observed in expenditure on merchandise imports from December 2019 to May 2020, reversed in June 2020, although a decline of 24.6 per cent was recorded on a year-on-year basis.
In June 2020, expenditure on merchandise imports stood at US dollars 1,055 million. Expenditure on all major import sectors declined on a year-on-year basis in June 2020, with intermediate and investment goods imports declining the most.
This broadbased decline is attributable to the measures taken by the government and the Central Bank since March 2020 to restrict the importation of selected goods to mitigate the adverse effects created by the COVID-19 pandemic and also to the steep decline in expenditure on fuel imports.
(LIN)