Workers´ remittances rose by 19.6 percent to Rs 225.06 billion in the seven-month period, the latest macroeconomic report of Nepal Rastra Bank (NRB), the central monetary authority, says. However, this growth rate was lower than 35.5 percent recorded in the same period last year.[break]
Along with slow growth rate in workers´ remittance, substantial rise in merchandise imports also caused the current account to post a deficit, the central bank report shows.
In the seven-month period, merchandise imports surged by 24 percent to Rs 316.21 billion. In the same period last year, imports had increased by 16.9 percent to Rs 254.95 billion.
“Total imports surged in the review period due to a sharp increase in imports from both India and other countries,” NRB says.
Imports from India went up by 26.1 percent in the review period, while imports from other countries rose by 20.3 percent.
“Imports from India increased primarily owing to an increase in the imports of petroleum products, vehicles and spare parts, rice, cement and MS billet, among others,” NRB report states. “Likewise, imports from other countries increased mainly on the account of increment in imports of readymade garment, pipe and pipe fittings, telecommunication equipment parts, gold and MS wire rod, among others.”
This surge in merchandise imports compares with meager 5.6 percent rise in merchandise exports. In the seven month period, the country exported goods worth Rs 44.98 billion, as against Rs 42.59 billion registered in the same period last year.
Nepal´s merchandise exports registered moderate growth as exports to India grew by marginal 2.9 percent in the seven-month period, as against 13 percent in the same period last year. Exports to other countries, on the other hand, increased by 11 percent compared to rise of 14.3 percent in the same period last year.
As exports could not keep pace with imports, the country´s trade deficit widened by 27.7 percent in the seven-month period to Rs 271.22 billion.
All this - the widening of trade and current account deficit - exerted pressure on the balance of payment (BoP) - the total transaction made in the economy. The country´s BoP surplus shrunk to Rs 1.59 billion in the seven-month period as against a surplus of Rs 76.28 billion recorded in the same period last year.
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