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Sri Lanka Equity Forum » Stock Market Talk » Sri Lanka Trade Deficit to widen with more urgent rice imports

Sri Lanka Trade Deficit to widen with more urgent rice imports

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DS Wijesinghe


Manager - Equity Analytics
Manager - Equity Analytics
With 19 districts suffering a severe drought, Sri Lanka is urgently importing 200,000 metric tons of rice from three countries to meet a shortfall in the domestic market, the Ministry of Industry and Commerce Has said

For this purpose, a four-member delegation is leaving tonight to Pakistan and from there will proceed to Myanmar. India is the third country. The team is led by Secretary to the Ministry of Industry and Commerce Chinthana Lokuhetti and includes two officials from the Finance Ministry and a food technologist from ITI.

Minister of Industry and Commerce Rishad Bathiudeen said the need to import comes due to the failure of the Yala season and the floods. “We have picked Myanmar, Pakistan and India,” the Minister said in a media release issued by the Ministry.The official team, after checking both Pakistani and Myanmar markets, will decide whether to choose Pakistan or Myanmar (or both) to purchase 100,000 MT rice.

The Ministry said it is also purchasing another 100,000 MT from India immediately through the Indian private sector. Tenders from Indian private suppliers are being received and the winning Indian supplier is expected To be decided

Teller

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Moderator
It's expected to be widen more

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
DS Wijesinghe wrote:With 19 districts suffering a severe drought, Sri Lanka is urgently importing 200,000 metric tons of rice from three countries to meet a shortfall in the domestic market, the Ministry of Industry and Commerce Has said

For this purpose, a four-member delegation is leaving tonight to Pakistan and from there will proceed to Myanmar. India is the third country. The team is led by Secretary to the Ministry of Industry and Commerce Chinthana Lokuhetti and includes two officials from the Finance Ministry and a food technologist from ITI.

Minister of Industry and Commerce Rishad Bathiudeen said the need to import comes due to the failure of the Yala season and the floods. “We have picked Myanmar, Pakistan and India,” the Minister said in a media release issued by the Ministry.The official team, after checking both Pakistani and Myanmar markets, will decide whether to choose Pakistan or Myanmar (or both) to purchase 100,000 MT rice.

The Ministry said it is also purchasing another 100,000 MT from India immediately through the Indian private sector. Tenders from Indian private suppliers are being received and the winning Indian supplier is expected To be decided


gana kiyak yanawada....

nikan moda katha kiyanna epa methana..


14000 million aprox. 14 Billion Rs maximum. around 90 Million USD. this is is little impact...

DS Wijesinghe


Manager - Equity Analytics
Manager - Equity Analytics
We have seen marginal growths in exports in the recent months mainly due to good tea prices. However import bills are rising and one of the main reasons for this is rice imports and was the main cause for the widening trade deficit this year far. With the prevailing drought off rice imports further increase, the trade deficit is expected to rise further

DS Wijesinghe


Manager - Equity Analytics
Manager - Equity Analytics
by stockback Today at 8:59 pm
gana kiyak yanawada....nikan moda katha kiyanna epa methana..

Modakama methana  pradarshanaya Karanna Kalin pahala thiyena data kiyawala watahaganna

Sri Lanka exports up in May, trade deficit widens to $886mln

ECONOMYNEXT – Sri Lanka’s exports rose for the third straight month in May 2017, helped by higher earnings from tea, but increased spending on imports widened the trade deficit to $886 million, the central bank said.

Export earnings rose 7.8 percent to $841.2 million in May 2017 from a year ago with exports of tea up by 45.9 percent to $132 million owing to both higher prices and increased volumes, it said in a statement.

“Reflecting high tea prices in the international market, the average export price of tea increased to $5.41 per kilo in May 2017 in comparison to $4.24 per kilo in May 2016.”

However, export earnings from textiles and garments declined by 4.1 percent o $359 million in May 2017 reflecting a decline in garment exports to the USA and EU markets.

“Despite exports increasing for the third consecutive month, the higher increase in import expenditure resulted in a further expansion of the trade deficit,” the central bank said.

Imports rose 8.6 percent to $1.73 billion in May 2017 from a year ago,

Expenditure on consumer goods imports increased by 17.5 percent to $386million in May 2017, mainly driven by higher imports of food and beverages particularly sugar and rice.

“The increasing trend in rice imports observed since January 2017 continued in May 2017 as a result of measures taken by the government to encourage rice imports to meet the shortage in the domestic supply,” the statement said.

Spending on import of intermediate goods increased by 1.6 per cent to $865 million in May 2017, largely due to higher expenditure on fuel imports.

Spending on fuel imports increased by 15.3 percent owing to increases in average import prices of all fuel categories, despite lower import volumes of refined petroleum and coal.
(COLOMBO, August 01, 2017)

stockback


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
what about foreign remittance and Tourism income.

to pay loan sri lankan government taking. loans and do some infra structure projects.


long term solution is increase exports. no any other solutions.

DS Wijesinghe


Manager - Equity Analytics
Manager - Equity Analytics
stockback wrote:what about foreign remittance and Tourism income.

to pay loan sri lankan government taking. loans and do some infra structure projects.


long term solution is increase exports. no any other solutions.

When a country's imports exceed exports it is called trade deficit. When exports exceeds imports is is trade surplus

Trade deficit or surplus relate to imports and exports only. Income from tourism and foreign remittances are not a import or an export

Teller

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Moderator
Basics of Trade Deficits and Surpluses
Much like you manage and monitor the inflows and outflows of your own finances and cash in your checking account, so do economists and countries when it comes to their trade balance. There may be many underlying reasons why you personally run a deficit or surplus in your bank account from month to month. The same can be said for a country's trade balance. Before we dive into some examples of trade deficits and surpluses, let's review the basics.

Simply defined, a country's trade balance, also called balance of trade, is the calculation of its exports minus imports. The balance can also be understood as how many goods and services are being sold to foreign countries minus how many goods and services our domestic citizens are buying from foreign countries. A balance of trade surplus happens when the value of all exports exceeds the value of all imports. A balance of trade deficit is when the value of all imports exceeds the value of all exports.

Trade Balance
So, do you think the U.S. has a trade balance surplus or deficit? If you chose deficit, you are correct. The U.S. has the world's largest trade deficit and has run a trade deficit since 1975. In 2013, the deficit in goods and services was more than $472 billion! That means we imported and bought a lot more electronics, raw materials, oil, and other goods than we sold to foreign countries. You might ask yourself, is that a bad thing? Seems like it might be. Those arguments and discussions are beyond the scope of this lesson, but the short answer is, it depends.

For the purpose of this lesson, what you need to know is that there are many factors that can affect the balance of trade. A few of these are exchange rates, currency valuations, economic growth, income of citizens, inflation, recessions or growth in other countries, and the competitiveness of domestic firms.

While achieving a perfect trade balance may not be practical or even in the best interest of a country, it is important to briefly discuss the concept in theory. A perfect trade balance would be a situation where a country would import only as much as it exports, leading to trade and money flows that are balanced. A country can balance its trade either on a trading partner basis in which total money flows between two countries are equalized, such as between the U.S. and Canada, or it can balance the overall trade and money flows so that a trade deficit with one country, such as China, is balanced by a trade surplus with another country, such as Brazil.

Now that you understand the concept of a perfect trade balance, let's look at some examples of the more practical and common situations where a trade deficit or trade surplus exists.

Teller

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Moderator
2nd point...this is much important to consider as stockback highlighted same...



Balance Of Trade - BOT
What is 'Balance Of Trade - BOT'
The balance of trade (BOT) is the difference between a country's imports and its exports for a given time period. The balance of trade is the largest component of the country's balance of payments (BOP). Economists use the BOT as a statistical tool to help them understand the relative strength of a country's economy versus other countries' economies and the flow of trade between nations. The balance of trade is also referred to as the trade balance or the international trade balance.

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BREAKING DOWN 'Balance Of Trade - BOT'
A country that imports more goods and services than it exports has a trade deficit. Conversely, a country exports more goods and services than it imports has a trade surplus. The formula for calculating the BOT can be simplified to imports minus exports. However, the actual calculation is comprised of several elements.
To make complete sense, the raw number of the trade deficit or surplus must be compared to the country's gross domestic product (GDP), since larger economies may be better suited to handle large deficits and surpluses.

Detailed Formula for the Calculation of a Country's BOT
Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy and foreign investments in the domestic economy. By subtracting the credit items from the debit items, economists arrive at a trade deficit or trade surplus for a given country over the period of a month, quarter or year.

Examples of Balance of Trade
There are countries where it is almost certain that a trade deficit will occur. For example, the United States has had a trade deficit since 1976, in large part due to its imports of oil and consumer products. Conversely, China, a country that produces and exports many of the world's consumable goods, has recorded a trade surplus since 1995.

A trade surplus or deficit, taken on its own, is not necessarily a viable indicator of an economy's health. The numbers must be taken in context relative to the business cycle and other economic indicators. For example, in a recession, countries like to export more, creating jobs and demand in the economy. In a strong expansion, countries prefer to import more, providing price competition, which limits inflation.

In 2015, the European Union, Germany, China and Japan all had very large trade surpluses, while the United States, the United Kingdom, Brazil, Australia and Canada had the largest trade deficits.

Teller

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Moderator
Just try to understand Debit and Credit items carefully as noted above.

DS Wijesinghe


Manager - Equity Analytics
Manager - Equity Analytics
Teller wrote:Just try to understand Debit and Credit items carefully as noted above.

Thanks Teller much appreciated

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