Kathmandu, April 11:

With a continuous fall in exports and a steady deceleration in imports, Nepal’s foreign trade continues to present a gloomy picture over the first seven months of the current fiscal year.

Slowdown in external demand for Nepali goods, long hours of load shedding, and the prolonged period of unrest in Terai, among others factors accounted for the poor performance of the export sector in the review period, states a Nepal Rastra Bank (NRB) report on the current macroeconomic situation.

During the first seven months of 2006-07, total exports fell by 3.9 per cent to Rs 35.67 billion, in contrast to an increase of 12.2 per cent in the corresponding period of 2005-06.

Nepal had exported various goods worth Rs 37.12 billion during the period. Of total exports, export to India declined by 5.4 per cent to Rs 24.69 billion as against a sharp increase of 22.8 per cent to Rs 26.10 billion in the same period of 2005-06.

Likewise, exports to other countries fell by 0.4 per cent in comparison to a decline of seven per cent a year earlier.

The decline in exports to India was attributed to the decline in the exports of polyester yarn, cattle-feed, plastic utensils, GI pipes, pulses and noodles. Likewise, the decline in exports to other countries was due to a decrease in the export of woollen carpets, readymade garments, pashmina, handicrafts and jewelleries.

Total imports decelerated by 0.3 per cent to Rs 102.79 billion in the first seven months of the current fiscal compared to a significant growth of 25.1 per cent in the same period previous year.

While imports from India increased by 2.7 per cent in the review period compared to a higher growth of 31.3 per cent in the corresponding period of the previous year, imports from other countries registered a decline of 3.6 per cent in contrast to a growth of 16.4 per cent a year earlier.

A slight rise in the import of vehicles and parts, hot rolled sheet, electrical equipment, thread and agricultural equipment and parts from India combined with a significant decline in the import of palm oil, polythene granules, other machinery and parts, MS billet, and electrical goods from other countries led to the deceleration in total imports during the period.

Due to a decline in exports vis-à-vis imports, total trade deficit continues to widen, as it crossed Rs 67.12 billion during the period.

However, the trade imbalance slowed down to 2.6 per cent compared to a significant rise of 33.8 per cent during the corresponding period of the previous year.

Nepal’s trade deficit with India widened further by 8.5 per cent to Rs 39.69 billion, whereas with other countries it expanded to Rs 27.41 billion during the period.

The overall balance of payments (BoP) registered a surplus of Rs 6.3 billion in the review period compared to a higher level of Rs 13 billion in the corresponding period of 2005-06.

The deceleration in growth of remittance and rise in deficits under net services were some of the factors responsible for lower level of BoP surplus in the review period, states the central bank.