Merchandise exports recovered in December 2020 from the impact of the second wave of the COVID-19 pandemic in the country, while merchandise imports continued to decline on a year-on-year basis supported by the continuation of restrictions on non-essential imports and comparatively low global oil prices.
Overall, the trade deficit contracted significantly by US dollars 2.0 billion in 2020 compared to 2019. Recording the historically highest monthly inflow, workers’ remittances continued to support the external sector resilience in December 2020 as well.
In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded marginal net outflows in December 2020. At the end of the year, gross official reserves stood at US dollars 5.7 billion.
The deficit in the trade account narrowed in December 2020 by US dollars 222 million to US dollars 562 million, from US dollars 784 million recorded in December 2019, due to a larger decline in imports compared to the decline in exports.
Further, the overall deficit in the trade account in 2020 narrowed to US dollars 5,978 million from the deficit of US dollars 7,997 million recorded in 2019.
Earnings from merchandise exports recovered to a great extent in December 2020 from the setback suffered in the previous two months due to the second wave of the pandemic.
