KATHMANDU, JUNE 09
The Nepal Rastra Bank (NRB) unveiled its latest macroeconomic update today, highlighting a gradual economic recovery in the country. The report indicates improvements in various sectors, including remittance inflows, balance of payments, gross foreign exchange reserves, and a narrowing trade deficit.
Remittance inflows have shown significant growth, surging by 23.4 per cent to Rs 1,005.18 billion during the first 10 months of the current fiscal year (mid-July to mid-May). This is a noteworthy improvement compared to a drop of 0.5 per cent recorded in the same period the previous year.
The total trade deficit has narrowed by 15.9 per cent to Rs 1,204.42 billion during the 10 months of 2022-23.This is in contrast to a 24.9 per cent increase in the trade gap in the corresponding period of the previous year.
The report also highlights a decrease in merchandise imports by 16.8 per cent, reaching Rs 1,335.32 billion during the 10 months of 2022-23. This is a positive development compared to the 28 per cent increase observed a year ago.
However, there has been a worrying plunge in merchandise exports, which dropped by 24.5 per cent year-on-year to Rs 130.90 billion. In the same period of the previous year, exports had surged by 59.8 per cent.
Breaking down the exports into categories, the report reveals that intermediate goods accounted for 54.9 per cent and final consumption goods accounted for 44.5 per cent of the total exports.
However, the ratio ofcapital goods in total exports remained negligible at 0.6 per cent during the review period. In the corresponding period of the previous year, the ratio of intermediate, capital, and final consumption goods had stood at 47.1 per cent, 0.02 per cent, and 52.9 per cent, respectively.
Regarding imports, the report indicates that intermediate goods constituted 53.2 per cent, capital goods 8.4 per cent, and final consumption goods 38.4 per cent during the review period.
In the same period of the previous year, these ratios were 52.8 per cent, 10.4 per cent, and 36.8 per cent, respectively.
Balance of payments (BoP) - the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world - was at a surplus of Rs 288.50 billion in the review period compared to a deficit of Rs 1.63 billion in the same periodthe previous year.
Meanwhile, the current account - country's imports and exports of goods and services, payments made to foreign investors, and transfers such as foreign aid - recorded a deficit of Rs 54.67 billion in the review period, which is an improvement compared to a deficit of Rs 545 billion in the same period the previous year.
The gross foreign exchange reserves increased by 20.9 per cent to $11.21 billion in mid-May, 2023 from $9.54 billion in mid-July, 2022. Based on the imports during the 10 months of 2022-23, the foreign exchange reserves of the banking sector are sufficient to cover prospective merchandise imports for 11.2 months and merchandise and services imports for 9.7 months.
Inflation at 7.41 per cent
The year-on-year consumer price inflation stood at 7.41 per cent in mid-May 2023 compared to 7.87 per cent a year ago, according to the 'Current Macroeconomic and Financial Situation of Nepal' report unveiled by the Nepal Rastra Bank on Friday. Food and beverage inflation stood at 5.54 per cent whereas non-food and service inflation rose to 8.89 per cent in the review month.
A version of this article appears in the print on June 10, 2023, of The Himalayan Times.
