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Sri Lanka’s trade deficit widens in April 2020

According to the latest external trade data released by the Central Bank, country’s trade deficit widened in April 2020 as exports fell more than the decline in imports.

Sri Lanka’s external sector performance in April 2020 was severely affected by the COVID-19 pandemic related economic interruptions.

The imposition of a partial lockdown had a significant impact on Sri Lanka’s merchandise exports sector while shutting down the tourism industry in April 2020.

The expenditure on merchandise imports also declined, with disruption to import related supply chains and restrictions imposed on non essential imports by the government and the Central Bank.

The deficit in the trade account widened in April 2020 to US dollars 840 million, from US dollars 797 million in April 2019, as the decline in exports exceeded the decline in imports.

However, on a cumulative basis, the trade deficit widened to US dollars 2,693 million during the first four months of 2020 from US dollars 2,458 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, deteriorated by 16.4 per cent (year on year) in April 2020 as export prices declined at a faster pace than the decline in import prices.