Colombo, Sri Lanka: Trade of Sri Lanka with Hong Kong and China has seen a steady decline since 2020.
Kapila Bandara, writing in the Sunday Times said that Sri Lanka’s trade with China, including tea shipments, steadily declined in 2020. Separately, its meagre bilateral trade with wealthy Hong Kong, a world-leading trade and financial services centre, has fallen sharply in the five years to 2020.
Sri Lanka’s exports to China in 2020 have dropped to USD 223 million, from USD 229.06m in 2019, and down from USD 230.59 million in 2018, data from Sri Lanka Customs, Central Bank of Sri Lanka and Export Development Board show, reported the Sunday Times.
Out of Sri Lanka’s total trade, China accounted for just 2.22 per cent in 2020, compared with the United States absorbing 24.9 per cent, the UK taking up 9.06 per cent and Germany buying 5.68 per cent of goods.
Sri Lanka’s biggest trade imbalance is with China at a negative USD 3.35 billion in 2020. Imports from China have swelled to USD 3.57 billion compared with just USD 223 million goods China buys from Sri Lanka. Trade data does not show any purchases of fruit from Sri Lanka, said Bandara.
The worsened trade picture reflects the foreign debt binge that began with the Mahinda Rajapaksa government issuing Sri Lanka’s first international sovereign bond of USD 500 million in 2007 at a fixed annual coupon of 8.25 per cent, and which inevitably birthed the ‘economic Halloween’ that scared the life out of Sri Lankans, thousands of whom are leaving, reported the Sunday Times.
On December 17, Fitch Ratings downgraded Sri Lanka’s long-term foreign-currency issuer default rating to ‘CC’, from ‘CCC’, citing “an increased probability of a default event in coming months”. Moody’s downgraded Sri Lanka in October.
This weaker trade picture with Hong Kong emerges from Census and Statistics Department data cited by Hong Kong Trade Development Council, an agency reputed for its integrity and research excellence.
Hong Kong’s merchandise exports to Sri Lanka fell by 10.3 per cent from 2016 to 2020; from USD 511.7 million (Rs 103.11 billion; calculated at a bank exchange rate of Rs 201.50 per US dollar) in 2016, to USD 431.1 million (Rs 86.82 billion) in 2020.
Hong Kong’s imports from Sri Lanka have also dropped by 20.9 per cent from 2016 to 2020, sliding from USD 122.9 million in 2016 to USD 107.3 million in 2020, said Bandara.