February trade deficit widened; outflows from CSE, Bonds and slowing remittances to weigh

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The trade deficit widened in February 2020 compared to the same month the previous year, as expenditure on imports increased at a faster pace than the increase in earnings from exports, the central bank said in a statement.

The deficit in the trade account widened in February 2020 to US dollars 574 million, from US dollars 451 million in February 2019. However, on a month on month basis, the trade deficit in February 2020 recorded a contraction.

On a cumulative basis, the trade deficit widened to USD 1,304 mn during the first two months of 2020 compared to USD 1,069 mn in the corresponding period of 2019.

Foreign investment in the Colombo Stock Exchange, including primary and secondary market transactions, recorded a net outflow of 6 million US dollars during February this year, Central Bank data showed.

On a cumulative basis, the CSE has recorded a net outflow of 22 million US dollars in the first two months of 2020.

Export earnings in February 2020 showed a marginal YoY growth of 0.7% to US$ 988 from US$ 981 in February 2019.

However, export earnings during the first two months of this year declined by 1.3 percent, to USD 1,993 mn from USD 2,019 mn last year.

Meanwhile, workers’ remittances recorded a growth of 5.4 per cent in February 2020, year on year, amounting to US dollars 527 million.

On a cumulative basis, workers’ remittances grew by 6 percent to US dollars 1,108 million during the first two months of 2020 in comparison to the corresponding period of 2019.

The Central Bank said, workers’ remittances are also likely to be affected by the COVID-19 outbreak in the forthcoming months, with key sources of remittances such as Italy, South Korea and the Middle East being affected by the pandemic and the resultant economic slowdown.