Sri Lanka: International Trade - Performance and Prognosis

Abstract

This brief provides a detailed analysis of Sri Lanka's trade performance during 2013 and the first quarter of 2014. The review highlights the external and internal drivers that shaped Sri Lanka's external trade developments. The key challenges the country faces in terms of tweaking trade policy to meet the twin objectives of reducing trade deficit and increasing government revenue is discussed in detail. The analysis shows that reducing the trade deficit by curtailing imports may be feasible in the short run, but it will adversely affect government revenue and economic growth.