Nepal’s Trade Deficit Increases by 70.6 Percent

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Nepal’s Trade Deficit Increases by 70.6 Percent

September 24: Total trade deficit of Nepal increased 70.6 percent to Rs 129.97 billion during the first month of 2021/22. According to Nepal Rastra Bank (NRB), such a deficit had decreased 22.2 percent in the same period of the previous year.

Publishing the Current Macroeconomic and Financial Situation Report on Thursday,  NRB said that the export-import ratio increased to 13.8 percent in the review period from 11.2 percent in the same period of the previous year.

During the first month of 2021/22, merchandise exports of Nepal increased 115.9 percent to Rs 20.76 billion compared to an increase of 8.9 percent in the same period of the previous year.

Destination-wise, exports to India, China and other countries increased 167.0 percent, 47.8 percent and 17.5 percent respectively. Exports of soybean oil, palm oil, polyester yarn and thread, juice, oil cake, among others increased whereas exports of cardamom, medicine (Ayurvedic), herbs, wire, readymade leather goods, among others decreased in the review period.

Similarly, merchandise imports increased 75.7 percent to Rs 150.73 billion during the review period against a decrease of 19.6 percent a year ago.

Destination-wise, imports from India, China and other countries increased 58.7 percent, 87.6 percent and 120.8 percent respectively. Imports of petroleum products, transport equipment and parts, crude soybean oil, MS billet, gold, among others increased whereas imports of chemical fertilizer, cement, tobacco, aircraft spare parts, readymade garments among others decreased in the review period.

Based on customs points, exports from Kanchanpur, Mechi and Nepalgunj Customs Offices decreased whereas exports from all other customs points increased in the review period, the report further states. On the import side, imports from Kailali Customs Office decreased whereas imports from all other customs points increased in the review period.

As per the Broad Economic Categories, the intermediate and final consumption goods accounted for 31.8 percent and 68.2 percent of the total exports respectively, whereas the ratio of capital goods in total exports remained negligible at 0.02 percent in the review period.

In the corresponding period of the previous fiscal year, the ratio of intermediate, capital and final consumption goods remained 32.0 percent, 2.8 percent and 65.3 percent of total exports respectively. On the imports side, the share of intermediate goods remained 53.7 percent, capital goods 11.5 percent and final consumption goods remained 34.8 percent in the review period. Such ratios were 50.6 percent, 13.8 percent and 35.6 percent respectively in the same period of the previous year.

 

Current Account

Similarly, the current account remained at a deficit of Rs 47.90 billion in the review period compared to a surplus of Rs 24.89 billion in the same period of the previous year. In the US Dollar terms, the current account registered a deficit of 402.4 million in the review period compared to a surplus of 207.7 million in the same period of the previous year.

Capital Transfer and FDI

In the review period, capital transfer decreased 38.0 percent to Rs 679.7 million and net foreign direct investment (FDI) decreased 65.5 percent to Rs 480.6 million. In the same period of the previous year, capital transfer and net FDI amounted to Rs 1.10 billion and Rs 1.39 billion respectively.

Balance of Payments

Balance of Payments (BOP) registered a deficit of Rs 38.75 billion in the review period against a surplus of Rs 51.46 billion in the same period of the previous year. In the US Dollar terms, the BOP recorded a deficit of 325.5 million in the review period against a surplus of 429.4 million in the same period of the previous year.

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