Trade deficit declines by 15.2% to Rs 1,337.39 billion

KATHMANDU: Nepal’s merchandise exports faced a significant decline of 22.7%, reaching Rs 143.59 billion, over the first 11 months of the current fiscal year 2022/23. This decline was in stark contrast to the previous year when exports had increased by 53.3% during the same period.

According to the Current Market Situation Report (for the 11 months of the current fiscal year) released on Monday by the Nepal Rastra Bank (NRB), exports to India, one of Nepal’s major trading partners, experienced a sharp decline of 32.2% in the review period. However, there was a notable increase in exports to China, rising by 106.7%, thanks to the opening of border trade points between the two countries. Likewise, exports to other countries increased by 9.9%. The positive performance in exports to China and other nations offers some hope for Nepal’s export sector.

Among the exported products, there were notable increases in the exports of zinc sheet, particle boards, cardamom, woolen carpets, and readymade garments, among others. On the other hand, exports of soybean oil, palm oil, oil cakes, textiles, silverware, and jewelry experienced a decline during the review period.

On the import front, merchandise imports decreased by 16%, amounting to Rs 1,480.98 billion during the eleven months of 2022/23. This decrease contrasts with the 27.5% increase recorded in the same period of the previous year. While imports from India fell by 14.8%, imports from China and other countries were down by 17.1%, and 18.5%, respectively.

Imported goods such as chemical fertilizers, sponge iron, gold, paper, and other stationeries witnessed an increase in demand. However, imports of transport equipment and parts, M.S. billet, medicine, crude soybean oil, and other machinery and parts experienced a decline during the review period.

In terms of customs points, exports from Bhairahawa, Birgunj Dry Port, Jaleshwor, Kailali, Krishnanagar, Mechi, Rasuwa, Tatopani, and Tribhuwan Airport Customs Office increased during the period, while exports from other major customs points declined during the same period. Similarly, imports from Rasuwa Customs Office increased, but imports from other major customs points declined.

Thanks to a drop in imports, Nepal’s total trade deficit decreased by 15.2%, amounting to Rs.1337.39 billion in the eleven months of 2022/23. This decrease is a positive development compared to the 25% increase observed in the corresponding period of the previous year. However, the export-import ratio decreased to 9.7 percent from 10.5 percent in the previous year.

Regarding the composition of foreign trade, intermediate and final consumption goods accounted for 55% and 44.3% of total exports, respectively. The ratio of capital goods in total exports remained negligible at 0.6 percent. These figures highlight the dominance of consumption-oriented goods in Nepal’s export market.

Regarding imports, intermediate goods accounted for 53.4%, while capital goods and final consumption goods accounted for 8.4% and 38.2%, respectively. Compared to the previous year, there was a slight decrease in the share of capital goods and an increase in the share of intermediate goods in total imports.

In the services sector, Nepal witnessed a deficit of Rs 67.68 billion in net services income during the eleven-month review period. This deficit is an improvement compared to the deficit of Rs 99.50 billion recorded in the same period of the previous year.

Under the service account, travel income saw substantial growth, increasing by 94.3% to Rs.58.06 billion in the review period, compared to Rs.29.88 billion in the previous year. However, travel payments also rose by 37.9%, reaching Rs 119.99 billion, including a significant portion spent on education (Rs.89.18 billion). In the same period of the previous year, travel payments amounted to Rs.87.03 billion, with education-related payments at Rs.59.99 billion.