High imbalance between imports and exports, trade deficit reaches Rs 955 billion

Kathmandu: Nepal’s foreign trade deficit has widened significantly due to the high imbalance between imports and exports. According to the Current Macroeconomic and Financial Situation Report for the first seven months of the ongoing fiscal year released on Wednesday by the Nepal Rastra Bank, the growing gap between imports and exports has contributed to the increase in the trade deficit.

As per the report, total merchandise exports increased by 32.2 percent to reach Rs 168.15 billion during the review period. In the same period of the previous fiscal year, exports had grown by 46.5 percent.

According to the central bank, exports to India and other countries increased by 40.3 percent and 9.4 percent respectively, while exports to China declined by 55.3 percent. In terms of commodities, exports of soybean oil, large cardamom, palm oil, jute products, shoes and slippers, among others, increased. However, exports of zinc sheets, particle boards, tea, woolen carpets, handicrafts and other handicraft products declined.

During the first seven months of fiscal year 2082/83, total merchandise imports increased by 13.6 percent to reach Rs 1.123 trillion. In the corresponding period of the previous fiscal year, imports had increased by 10.1 percent.

Based on the country of origin, imports from India, China, and other countries rose by 5.5 percent, 22.3 percent, and 29.5 percent respectively.

In terms of commodities, imports of crude soybean oil, chemical fertilizers, silver, transport equipment, vehicles and spare parts, and gold increased, while imports of hot-rolled sheets in coils, edible oil, pulses, MS billets, MS wires, rods, bars, and coils declined.

According to the Nepal Rastra Bank, the total merchandise trade deficit during the first seven months of fiscal year 2082/83 increased by 10.9 percent, reaching Rs 955.34 billion. In the same period last year, the trade deficit had risen by 6.2 percent. During the review period, the export-import ratio stood at 15 percent, compared to 12.9 percent in the same period last year.

During the review period, goods worth Rs 103.92 billion were imported from India through payments in convertible foreign currency. In the corresponding period of the previous fiscal year, such imports amounted to Rs 103.94 billion.

According to broad economic classification, the share of final consumption goods, intermediate goods, and capital goods in total exports during the review period stood at 69.7 percent, 29.3 percent, and 1 percent respectively. In the same period last year, these shares were 61.8 percent, 37.4 percent, and 0.8 percent respectively.

Similarly, in total imports during the review period, the share of final consumption goods, intermediate goods, and capital goods stood at 37 percent, 53.8 percent, and 9.2 percent respectively. In the same period last year, these shares were 39.9 percent, 51.2 percent, and 8.9 percent respectively.