Private sector enthusiasm stagnates as foreign trade declines in the first month of current FY

Published On: August 24, 2024 08:40 PM NPT By: Republica | @RepublicaNepal

Imports totaled Rs 128.37 billion, while exports amounted to Rs 12.22 billion

KATHMANDU, Aug 24: The economic slowdown seen over the past two fiscal years has persisted into mid-July of the current Fiscal Year 2024/25. In the import-dependent Nepali economy, both imports and exports in Shrawan (mid-July to mid-August) have decreased compared to the previous year.

A robust government was formed in mid-July between the two major political parties, the Nepali Congress and the CPN-UML, following a seven-point agreement. Both Prime Minister and the Finance Minister claimed that this development had boosted the morale of the private sector and businesses, leading improvement in the economy. However, data from the Department of Customs (DoC) shows a contraction in both imports and exports.

According to the DoC, in the first month of the current FY, goods worth Rs 128.37 billion were imported, while exports totaled Rs 12.22 billion. This marks a decrease of 0.67 percent in imports compared to Rs 129.23 billion in the same month of the previous FY 2023/24. Exports also fell by 9.63 percent, down from Rs 13.52 billion in the previous year.

With contractions in both imports and exports, Nepal’s total foreign trade has declined. The trade deficit has risen by 0.38 percent to reach Rs 116.15 billion, compared to Rs 115.71 billion in the same month last year. Total foreign trade has decreased by 1.52 percent, falling to Rs 140.60 billion from Rs 142.77 billion in the previous FY.

The decline in exports has led to an increased import-to-export ratio, rising from 9.55 percent to 10.5 percent. Additionally, the share of exports in foreign trade has decreased from 9.78 percent to 8.70 percent, while the share of imports has increased from 90.52 percent to 91.30 percent.

Despite these contractions, customs revenue has increased significantly in the given month. In Shrawan of the previous FY, customs revenue was Rs 32.33 billion, whereas this FY, it has risen to Rs 34.47 billion, representing a 6.59 percent improvement.

In terms of petroleum products, imports in Shrawan included diesel worth Rs 6.98 billion, petrol worth Rs 5.69 billion and cooking LPG worth Rs 4.82 billion. Although the import of petrol has increased, the import of diesel has decreased compared to the previous FY.

After petroleum products, machinery and its parts were imported worth Rs 10 billion. Electrical equipment and its parts amounted to Rs 9.64 billion, iron and steel imports totaled Rs 9.63 billion, vehicles were imported worth Rs 6.49 billion, and agricultural fertilizers amounted to Rs 6.18 billion, according to the DoC.

On the export side, carpets and other textiles were exported worth Rs 1.18 billion, iron and steel products were exported worth Rs 1.10 billion and products like tea and coffee were exported worth Rs 940 million, according to the DoC’s data.