Oct 12, 2020 (LBO) - Sri Lanka's trade deficit improved on a year-on-year basis with the deficit in the trade account in August 2020 narrowing to US dollars 342 million from US dollars 541 million in August 2019, as imports declined at a faster pace than the decline in exports, the Central Bank said.
Also, on a cumulative basis, the trade deficit narrowed by over US dollar one billion to US dollars 3,812 million during the period from January to August 2020 from US dollars 4,855 million in the corresponding period of 2019.
Meanwhile, terms of trade, i.e., the ratio of the price of exports to the price of imports, improved by 4.6 per cent (year-on-year) in August 2020 as import prices declined at a faster pace than the decline in export prices.
The export performance remained strong for the third consecutive month in spite of the pandemic affected global demand.
Meanwhile, workers’ remittances recorded a substantial growth in August 2020, strengthening the current account.
In the financial account, marginal foreign investment outflows were recorded from the government securities market, while the Colombo Stock Exchange (CSE) also recorded some foreign investment outflows during the month.
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With increased net inflows to the domestic foreign exchange market, the Central Bank was able to absorb foreign exchange during the month to build up gross official reserves. The Sri Lankan rupee, which demonstrated some volatility in mid August, stabilised towards the end of the month.