Tourism recovers by end 2019, then crashes due to COVID-19
View(s):It worsened in the next two months, slumping by 17.1 per cent in February and collapsing by 70.8 per cent to March, largely due to Sri Lanka banning all inbound tourist arrivals in mid-March due to COVID-19, latest data from Sri Lanka Tourism shows.
The trade deficit widened in January 2020 compared to January 2019, as earnings from exports declined while expenditure on imports increased,
Workers’ remittances recorded a year-on-year growth in January. Foreign investment in the government securities market recorded a net inflow in January while a net outflow was observed from the stock market. The Sri Lankan rupee remained broadly stable and appreciated against the US dollar in January 2020, but depreciated sharply in March in the face of the COVID-19 pandemic following a similar trend of many emerging market currencies due to strengthening US dollar and yen.
The deficit in the trade account widened in January to US$730 million, from $617 million in January 2019, led by a decline in exports and an increase in imports on a year-on-year basis.
Continuing the year-on-year declining trend observed since July 2019, earnings from merchandise exports declined by 3.2 per cent to $1,005 million in January, with all major export sectors recording declines in comparison to January 2019.
Earnings from agricultural exports declined in January (year-on-year) driven by all of its sub sectors except for minor agricultural products. Earnings from tea exports declined due to the combined effect of lower export volumes and average export prices. In addition, earnings from spices declined in January, mainly due to lower export volumes of many sub categories, while export prices also declined except for nutmeg and mace. Earnings from seafood exports declined with lower demand from the US.
Meanwhile, earnings from coconut exports declined, mainly due to lower export earnings from desiccated coconut categorised under kernel products and fibre under non kernel products.
In contrast, earnings from export of minor agricultural products increased during the month, mainly led by exports of arecanuts and betel leaves.
Earnings from industrial exports declined in January in comparison with January 2019, with low earnings from almost all sub sectors, except petroleum products, chemical products and gems, diamond and jewellery. Earnings from food, beverages and tobacco exports declined, led by manufactured tobacco exports and miscellaneous food preparations. In addition, earnings from rubber products declined mainly driven by lower tyre exports. Earnings from textiles and garments declined marginally, as a result of lower earnings from the US and non-traditional markets such as India, South Korea and Mexico, despite an increase recorded in exports to the EU.
Expenditure on merchandise imports increased, on a year-on-year basis, in January for the second consecutive month, by 4.8 per cent to $1,735 million, driven by higher consumer and investment goods imports.
Expenditure on consumer goods imports increased in January 2020 with the increase in expenditure on both food and beverages and non-food consumer goods imports.
Meanwhile, under non-food consumer goods category, expenditure on personal motor vehicle imports recorded a growth, on a year-on-year basis, for the second consecutive month in January. However, expenditure on personal vehicle imports declined significantly when compared with December 2019.
Earnings from tourism were provisionally estimated at $431 million in January compared to $460 million in January 2019.
Meanwhile, workers’ remittances recorded a growth of 6.5 per cent in January, year-on-year, amounting to $581 million.
Gross official reserves stood at $7.5 billion at end January, equivalent to 4.5 months of imports.
The Sri Lankan rupee, which remained broadly stable in the month of January as well as until the first week of March, depreciated sharply with the speculative behaviour in the market with the spread of COVID-19 outbreak. Accordingly, the rupee recorded a depreciation of 4.7 per cent against the US dollar by March 30.