• Exports also witness a negative growth

KATHMANDU: Nepal's imports from India and China decreased by 39.2 per cent and 14.1 per cent respectively during the first five months of the current fiscal year, the Nepal Rastra Bank (NRB) said in its report Current Macroeconomic and Financial Situation of Nepal. Imports from other countries also decreased by 22.6 per cent in the review period starting mid-July, thanks to the ongoing agitation in Tara-Madhes region and disruption at the Nepal-India border points. Likewise, exports to India, China and other countries fell owing to the obstructions at customs points including Birgunj. The merchandise exports witnessed a negative growth of 29.1 per cent to Rs. 26.17 billion in the review period, compared to a drop of 1.2 per cent to Rs. 36.91 billion in the same period of the previous year, the central bank said. Commoditywise, the import of petroleum product shrank to Rs. 18.35 billion -- a significant decline of 63.2 per cent from the level of Rs 49.88 billion during five months in the last fiscal. The imports of capital, raw material and consumption goods such as MS billet, machinery spare parts, steel rod, silver, crude soybean oil and edible oil also witnessed a significant decline, according to the NRB.  

Highlights

Current Macroeconomic and Financial Situation of Nepal Research Department, Nepal Rastra Bank

• Economic activities remained sluggish in the review period on account of headwinds from continued disruptions on trade routes and agitations in some areas of the southern parts of country, resulting in shortages of fuel and other essential commodities.
• Birgunj-Raxaul customs point, a major trading point of Nepal with India and the rest of the world, remained closed till the end of review period. However, other customs points bordering to India have gradually been eased signaling a positive impact on economic activities. Tatopani customs point, a major trading point with China, which remained closed after the earthquake, has still not come into operation. However, the Rasuwagadhi customs point has come into operation
• Nepal's external sector exhibited eight major trends during the review period of 2015/16. First, the merchandise trade continued to operate in the negative territory especially after the first month of the current fiscal year. For instance, merchandise exports saw a negative growth of 29.1 per cent to Rs. 26.17 billion in the first five months of 2015/16 compared to a drop of 1.2 per cent to Rs. 36.91 billion in the same period of the previous year. Destinationwise, exports to India, China and other countries fell on account of obstructions at customs points.
• Commoditywise, export of zinc sheet, textiles, juice, GI Pipe to India, tanned skin, noodles, and readymade garments to China and pulses, tanned skin, tea, and handicrafts to other countries decreased in the review period.
• Likewise, merchandise imports dropped significantly by 32 per cent to Rs. 213.83 billion as against a growth of 16.3 per cent to Rs. 314.52 billion in the same period of the previous year. The decrease in imports is attributed mainly to a decrease in imports of goods including petroleum products on account of unrest in southern plains along with obstruction at customs points.
• Sourcewise, imports from India, China and other countries fell by 39.2 per cent, 14.1 per cent and 22.6 per cent respectively in the review period. Commoditywise, the import of petroleum product shrank to Rs. 18.35 billion, a significant decline of 63.2 percent from the level of Rs. 49.88 billion a year ago.
• Likewise, merchandise imports dropped significantly by 32 per cent to Rs. 213.83 billion as against a growth of 16.3 per cent to Rs. 314.52 billion in the same period of the previous year. The decrease in imports is attributed mainly to a decrease in imports of goods including petroleum products on account of unrest in southern plains along with obstruction at customs points.
• Likewise, the exports-imports ratio reached 12.2 per cent in the review period on account of a fall in imports. Such ratio was 11.7 per cent in the same period of the previous year.
• Customs points-wise Trade Situation: The second development pertains to the change in customs points-wise trade flows in the review period. For example, while the major customs points such as Birgunj, Biratnagar, Bhairahawa and Nepalgunj showed trade decline of 67 per cent, 11.5 per cent, 2.7 per cent and 21.5 per cent respectively. Tribhuvan International Airport customs point and Kailali recorded a trade growth of 7.7 per cent and 135.4 per cent respectively.
• Export-Import Price Index: The third development relates to the terms of trade (TOT) situation, which continued to be favourable for Nepal. For instance, the y-o-y unit value export price index based on customs data increased by 13.1 per cent while import price index decreased by 7 per cent in the fifth month of 2015/16. Consequently, the TOT index increased by 21.6 per cent compared to an increase of 11.8 per cent in the corresponding period of the previous year. Increase in price of major export items such as tea, yarsagumba, cardamom caused the export price index to rise in the review period. Fall in the price of petroleum products resulted in a decline in import price index in the review period.

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