Abstract:
International trade among the countries are motivated by theories and
governments all over the world due to the self-insufficiency of producing goods
and services. The aim of this study is to analyze the balance of trade and its
relationship with current account of balance of payment of Sri Lanka. For this
purpose, data from various Annual Reports of Central Bank of Sri Lanka were
collected for a sample period of ten years from 2008 to 2017. Trend analysis is
used as the analytical technique of this study. The finding of this study shows
that the annual trade deficit of Sri Lanka is between 9 and 15 percent of its
annual GDP during the period of 2008-20017. More than one fourth of all
exports of Sri Lanka is to United States of America where as more than 80
percent of exports are dominated by India, China, Middle East, Asia-other and
European Union to Sri Lanka. During the last decade, Sri Lanka was
experiencing continuous trade deficit, which in turn depends on the behavioral
pattern of exports and imports of Sri Lanka. The finding of this study further
concluded that the deficit of current account balance is less than that of trade
balance in Sri Lanka and as an average, the trade account balance is more than
400 times the current account balance during the last ten years and in 2009 it
was 1,480 times.
