BoP witnesses marginal surplus
The country’s balance of payments (BoP) situation saw marginal surplus of Rs 960.2 million at the end of fiscal 2017-18, according to Nepal Rastra Bank’s annual macroeconomic outlook of last fiscal.
The current account balance of the country, however, widened to Rs 245.22 billion in the review period compared to narrow deficit of Rs 10.13 billion in fiscal 2016-17.
The country’s current account deficit widened due to skyrocketing imports against sluggish export, stagnant remittance growth and marginal growth in foreign direct investment in last fiscal.
The central bank’s macroeconomic outlook has said that imports skyrocketed in the review period to Rs 1,242.83 billion against exports of Rs 81.19 billion, which resulted in a huge trade imbalance worth Rs 1,161.64 billion.
According to the central bank, the country received remittances worth Rs 755.06 billion in the review period. Sharp depreciation of the Nepali currency vis-à-vis US dollar in last fiscal elevated the annual average growth of remittance to 8.6 per cent in fiscal 2017-18.
In the last fiscal, foreign direct investment inflow of Rs 17.51 billion was recorded compared to Rs 13.5 billion in fiscal 2016-17. The FDI flowed into energy, cement and hotel sectors, as per the central bank.
The macro economic outlook of the central bank reveals 4.6 per cent consumer price inflation in the last month of previous fiscal. Nepal witnessed low annual average inflation than in southern neighbour India, where the country’s two-thirds of trade takes place. Due to huge trade dependency, Indian inflation has direct impact on Nepali economy. But surprisingly, Nepal managed to tame its average annual inflation at 4.2 per cent against 4.4 per cent in India. The last time the country’s average annual inflation had slowed to four per cent was in fiscal 2003-04, 14 years back.
Looking forward, the macroeconomic outlook of central bank has painted an encouraging picture of the economy for ongoing fiscal.
“It can be expected that the agricultural growth will pick up in this fiscal 2018-19 due to favourable monsoon and timely paddy plantation, which is likely to underpin the sustained rebound in overall GDP growth seen in the last two years,” says the outlook.
The real GDP estimates (at producers’ prices) of Central Bureau of Statistics show growth of 7.9 per cent in 2016-17 and 6.3 per cent in 2017-18.