Import contraction to outpace fall in exports - Frontier Research | Daily News


 

Import contraction to outpace fall in exports - Frontier Research

Chief Executive Officer Frontier Research Amal Sanderatne (pictured) said that there was going to be a fall in imports far outpacing the loss of export revenue predicting that the balance of trade would improve. Sanderatne was speaking at the Ceylon Chamber of Commerce on May 7.

Sanderatne said that as a Sri Lankan he had a lot of experience with negative cycles and the data indicated that even though there was a fall in export revenue this was outpaced by the contraction in imports. Sanderatne expected the trade deficit to narrow.

Director of Economic Research Central Bank of Sri Lanka Dr. Chandranath Amarasekara said, “I believe it is time that interest rates in Sri Lanka are brought back to sensible levels.”

Dr. Amarasekara said that if financial institutions didn’t comply there would be severe reprimands by the Central Bank. Sanderatne felt that there would be a low-interest-rate regime going forward. Sanderatne said that it was difficult to make forecasts given that this is a once in a century event and that the scenario was difficult to imagine pre-emptively.

Dr. Amarasekara (pictured) said the Central Bank predicts a sharp V-shaped recovery and a positive growth rate of 2 percent. He said that the assumption was based on the positive growth recorded in the first quarter and a sharp recovery from the crisis.

The Central Bank predicts that there will be a US$ 2 billion saving from the fall in petrol prices for the country. There is expected to be lower imports of intermediate goods for export purposes.

Dr. Amaresekara noted that foreign holding in government securities was at a negligible level and therefore an outflow would not factor in heavily into the exchange rate.

The government and the Central Bank is not aiming to go to markets for financing but rather engaging with multilateral and bilateral partners for financing. Dr. Amaresekara said that negotiations are at advanced stages.

Dr. Amarasekara said, “In the short term there isn’t any point discussing inflationary measures. Those are macro-economic stability issues that can be dealt with later.”

Dr. Amarasekara added, “At the beginning (of the year) with the presidential election there was improved business confidence and the country was expected to reach 4 percent growth.”

 


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