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Sri Lanka's external sector strengthened further in June 2019 with a marked contraction in the trade deficit as imports declined and exports increased, the Central Bank reported Tuesday in its External Sector Performance review for the month.In June 2019, the trade deficit narrowed to US dollars 316 million, the lowest since October 2010.
The considerable reduction in the trade deficit in June 2019 was attributed to a notable decline in year-on-year (YOY) import expenditure by 23.1 percent and an increase of export earnings by 5.8 percent.Earnings from merchandise exports grew by 5.8 percent in June 2019 to US$ 1.084 billion compared with US$ 1.024 billion in June 2018 due to an increase mainly in industrial exports although earnings from agricultural exports decreased.
The growth in exports was driven by the improved performance in performance in textiles and garments and rubber product exports and transport equipment.Expenditure on imports declined in June 2019 for the eighth consecutive month by 23.1 percent to US$ 1.4 billion from US$ 1.82 billion a year ago.During the first six months of 2019, the cumulative deficit in the trade account contracted to US$ 3.597 billion from US$ 5.709 billion recorded in the corresponding period of 2018.
Cumulatively in the first half of the year YOY export earnings increased by 4.7 percent to US$ 6 billion from US$ 5.732 billion while import expenditure declined by 16.1 percent to US$ 9.6 billion from US$ 11.4 billion in 2018.
