Coronavirus-induced economic disruptions narrow trade deficit by 15 percent

Published On: November 7, 2020 07:30 AM NPT By: Republica | @RepublicaNepal

As imports contract and exports rise, trade deficit in the first quarter shrinks to Rs 261.22 billion

KATHMANDU, Nov 16: Nepal’s trade deficit has shrunk 15.13 percent in the first quarter of the current fiscal year 2020/21 due to the slowdown in economic activities following the outbreak of coronavirus and the subsequent containment measures enforced by the government.

According to statistics recently released by the Department of Customs, the total trade deficit fell by Rs 46.56 billion in the first quarter of the current fiscal year 2020/21 to Rs 261.22 billion compared to the same period of the last fiscal year 2019/20. Nepal’s trade deficit stood at Rs 307.78 billion in the first quarter of the last fiscal year 2019/20.

The trade deficit narrowed in the review period due to lower imports and higher exports.

The trade figures show that imports of the country fell 12.74 percent to Rs 292.27 billion from Rs 334.95 billion in the previous year. On the other hand, Nepal’s exports rose 14.28 percent to Rs 31.05 billion from Rs 27.17 billion, according to the data.

Customs officials attribute the contraction in overall foreign trade during the review period reflecting disruptions caused by the COVID-19.

“As trade within the country continues to disrupt and development projects are hit by the pandemic, the imports have slowed down, depressing the demands for imports of raw materials, equipment and other supplies,” said an official at the DoC. “However, we can see the imports returning to the previous trend once all containment measures are rolled back and businesses as well as economic activities start to resume,” the official added.

During the review period, the total foreign trade volume declined 10.71 percent to Rs 323.32 billion, according to the DoC.

In line with the drop in trade deficit, the exports to imports ratio of the country also fell to 1:9.41. This means Nepal imported goods worth Rs 9.41 against the export of every rupee. Such exports to import ratio in the first quarter of the last fiscal year was 1:12.33.