KATHMANDU, OCTOBER 25
In a sign of pent up demand and normalisation of trade activities, Nepal's total foreign trade surged by nearly 80 per cent to Rs 358.56 billion in the first two months of the fiscal year 2021-22, that is mid-July to mid-September.
In two months of 2021-22, merchandise exports soared by 115.4 per cent to Rs 44.04 billion compared to an increase of 10.5 per cent in the same period of the previous year, according to the latest macroeconomic update unveiled by the Nepal Rastra Bank today.
However, over the same period, merchandise imports increased by 75.9 per cent to Rs 314.52 billion against a decrease of 22.1 per cent a year ago.
This resulted in the total trade deficit widening by 70.8 per cent to Rs 270.48 billion in the two months of fiscal 2021-22.
Such a deficit had contracted by 24.9 per cent in the corresponding period of the previous year.
The export-import ratio increased to 14 per cent in the review period from 11.4 per cent in the corresponding period of the previous year.
As per the broad economic categories (BEC), the intermediate and final consumption goods accounted for 38.72 per cent and 61.26 per cent of the total exports, respectively, whereas the ratio of capital goods in total exports remained negligible at 0.02 in the review period. In the same period of the previous year, the ratio of intermediate, capital and final consumption goods stood at 31.3 per cent, 1.3 per cent and 67.4 per cent of total exports respectively.
On the imports side, the share of intermediate goods stood at 53.7 per cent, capital goods at 11.4 per cent and final consumption goods at 34.8 per cent in the review period. Such ratios were 52.4 per cent, 12.6 per cent and 35 per cent respectively in the same period of the previous year.
Net services income remained at a deficit of Rs 17.52 billion in the review period compared to a deficit of Rs 6.52 billion in the same period of the previous year. Meanwhile, remittance inflows decreased 6.3 per cent to Rs 155.37 billion in the review period against an increase of 8.1 per cent in the same period of previous year.
The gross foreign exchange reserves decreased 5.2 per cent to $11.14 billion in mid-September this year from $11.75 billion in mid-July. Based on the imports of two months of 2021- 22, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 8.6 months, and merchandise and services imports of 7.8 months, according to the NRB report.
The current account remained at a deficit of Rs 106.75 billion in the review period against a surplus of Rs 25.16 billion in the same period of the previous year.
In the review period, capital transfer decreased 36.3 per cent to Rs 1.25 billion and net foreign direct investment (FDI) increased 24.6 per cent to Rs 3.04 billion. In the same period of the previous year, capital transfer and net FDI amounted to Rs 1.96 billion and Rs 2.44 billion, respectively.
The balance of payments (BoP) remained at a deficit of Rs 83.41 billion in the review period against a surplus of Rs 67.63 billion in the same period of the previous year.
A version of this article appears in the print on October 26, 2021, of The Himalayan Times.
