Nepal’s total foreign trade declined Rs 36.69 billion in the first 10 months of the current Fiscal Year (FY) 2023/24. 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. The decline is also attributed to the decline in the consumption and investment in the country. Despite banks reducing interest rates significantly, investors are hesitant to take loans, reflecting a lack of confidence in the economic environment. This hesitancy is further compounded by the economic slowdown, affecting both domestic demand and production capabilities. This is a concerning development for the country's financial health and stability. As the government is preparing to introduce a new budget for the new FY 2024/25, it must take comprehensive measures to boost the country's economy.
Take measures to boost confidence of investors
Data from the DoC further shows that the seasonal spike in imports during the festive month of Dashain and Tihar, where monthly imports crossed Rs 148 billion, starkly contrasts with the successive declines in subsequent months. This volatility in import patterns highlights the need for a stable and sustainable approach to managing the country’s trade practices. One of the reasons why there has been a steady decline in the foreign trade is the growing exodus of Nepali youths abroad in the name of study and foreign employment. Our economy is heavily consumption-based. But with the decline in the number of consumers within the country, the decline seen in the country’s foreign trade cannot be taken otherwise. Equally important reason behind this is the lack of confidence among investors to invest in new business undertakings. If there are no new investments, there is no need to import any capital goods or raw materials, thereby reducing the overall volume of import. The government should take this into account and introduce new budget that seeks to retain youths within the country by providing them employment opportunities and seek to boost confidence among the potential investors. This will eventually increase the trade volume of our country, bringing positive development in the country's economy.
It is imperative for the government to adopt a multifaceted approach focusing on economic opportunities, governance, infrastructure, and social stability to retain youths in Nepal and boost investor confidence. Key strategies include revamping the education system to align with market needs, launching skill development programs, and providing financial incentives for startups and SMEs to create jobs. Infrastructure improvements, such as enhancing internet connectivity and transport systems, are crucial, alongside encouraging entrepreneurship through incubators and simplified business registration. Policy reforms to benefit youth, consistent economic policies, tax incentives, and strengthening the legal framework to protect property rights and ensure judicial efficiency are essential. Additionally, promoting key sectors like tourism and hydropower, and fostering international relations through bilateral and multilateral agreements and diaspora engagement, will further support economic growth and development. It is high time the government took appropriate measures to stop the ever increasing exodus of youths and create a conducive environment for investors in Nepal. Failure to do so will only worsen the already depleting revenue collection of the government, making it economically sustainable to run the country.
