Daily trade deficit hovers at Rs 1.41b

KATHMANDU, April 7: Nepal suffered a trade deficit of Rs 340.65 billion in the first eight months of the current fiscal year, or Rs 1.41 billion per day, marking an increment of 28 percent as against the same period of last fiscal year, the latest report of the Trade and Exports Promotion Center shows.

Nepal´s trade deficit has been widening at an alarming rate in the recent years, amid limited supply capacity, soaring imports and low exports. [break]

Nepal´s exports have lately been suffering due to continuous slowdown in factory outputs caused by perennial problems such as load-shedding and industrial unrest.

As a result, the contribution of exports to the total trade fell to 11.4 percent in the eight-month period to March 13, as against 13.4 percent in the same period last year.

In the eight-month period, Nepal´s merchandise goods exports rose by a moderate 2.6 percent to Rs 50.22 billion, while total imports shot up by 24 percent to Rs 390.87 billion.

Exports to India, Nepal´s largest trade partner, increased by negligible 0.3 percent to Rs 33.31 billion in the review period, while imports from the southern neighbor grew by a whopping 25.7 percent to Rs 255.79 billion due to rise in demand for petroleum products and food commodities.

Similarly, Nepal exported merchandise goods worth Rs 1.62 billion to China, the country´s second largest trade partner, in the eight-month period, up 206 percent than in the same period last year. However, the impressive growth rate figure pales in front of imports of Rs 46.5 billion from the world´s second largest economy--a 34.2-percent hike.

Although China has offered duty-free access for 7,787 Nepali products, the country has not been able to take full advantage of this facility and the number of products being exported to the northern neighbor is still very limited.

The latest report shows that woolen carpets, readymade garments (RMGs), toothpaste, essential oil, yarn and handmade paper are some of the major products whose exports are on the decline lately.

Exports of woolen carpet and RMGs fell by 16.9 percent and 22.5 percent, respectively, to Rs 3.43 billion and Rs 2.34 billion during the review period. However, exports of iron and steel products rose by 7.2 percent to Rs 8.04 billion. Exports of lentil also increased by 54.9 percent to Rs 2.37 billion and black cardamom exports rose by 5.8 percent to Rs 2.33 billion during the period. Similarly, exports of yarn dropped by 8.9 percent to Rs 3.7 billion while textile exports increased by 9.1 percent to Rs 3.54 billion in the review period.

Imports of products such as petroleum, gold, electronics, vehicles, pharmaceutical, cereal and fertilizers, among others, went up during the review period.

Imports of petroleum products--the biggest import commodity--increased by 17.1 percent to Rs 69.72 billion in the eight-month period, contributing significantly to the widening trade deficit.

Similarly, Nepal imported iron and steel products worth Rs 39.28 billion, up by 21.7 percent, in the review period.

Imports of vehicles and machinery also rose by 42.6 percent and 30.2 percent, respectively, to Rs 22.57 billion and Rs 21.11 billion, while imports of electronic and electrical goods, and gold rose by 16.2 percent and 5.7 percent, respectively, to Rs 16.22 billion and Rs 17.14 billion.

Top 5 imports