Nepal’s foreign trade declined around Rs 37 billion in the first 10 months of current FY

Published On: May 21, 2024 09:01 AM NPT By: Republica | @RepublicaNepal

Import expense fell 2.39 percent, export earnings fell 3.61 percent and trade deficit declined 2.26 percent

KATHMANDU, May 21: Nepal’s total foreign trade declined Rs 36.69 billion in the first 10 months of the current fiscal year.

The records with the Department of Customs (DoC) show that Nepal’s total foreign trade stood at Rs 1.429 trillion during mid-July 2023 and mid-May 2024, down from Rs 1.466 trillion in the same period last year. The decline in the trade volume has been attributed to the ongoing economic slowdown of the landlocked country.

According to economists, the decline in consumption and decline in investment have led to a fall in imports. “Although the banks have reduced their interest rates significantly, investors are not ready to take loans,” said Ram Prasad Gyanwali, former head of the Central Department of Economics at Tribhuvan University.

Both the imports and exports declined during the review period. According to the DoC, the country spent Rs 1.303 trillion in merchandise imports, compared to the imports of Rs 1.335 trillion during last fiscal year.

On the other hand, the export revenue also declined 3.61 percent. During the review period this year, Nepal exported goods worth mere Rs 126.17 billion.

Due to a huge gap in exports and imports, the country’s trade deficit stood at a whopping Rs 1.177 trillion. The figure of trade deficit however was less by 2.26 percent compared to that of the corresponding period in last year.

The share of export earnings was 8.83 percent of the total trade volume, while that of the import was 91.17 percent. The ratio of import to export reached 10.33, which shows that Nepal spends Rs 10.33 on imported goods for every earning of Re 1 from exporting its products.

The DoC records show that the country’s monthly imports crossed Rs 148 billion during the month of Dashain and Tihar between mid-September and mid-October. However, the imports declined successively almost every month thereafter.

The decline in trade volume also hit the revenue collection target set by the government. While the government has aimed to collect revenue worth Rs 1.422 trillion for the current fiscal year, it has not met even 60 percent of the target with only two months left for the fiscal year to end.

Meanwhile, Nepal imported more than 110,000 units of two-wheelers in the first 10 months this year. Out of these, 63,163 units were assembled inside the country, while remaining 47,425 were the finished products in the segment. This included 5,888 units of electric scooters.