Trade deficit down in first five months of FY

Kathmandu, Jan. 13

Nepal's trade deficit narrowed down by 10.9 per cent to Rs. 475.44 billion in the first five months of the current fiscal year 2020/21.

Trade deficit had contracted by 6.3 per cent in the same period of the previous year, according to the Current Macroeconomic and Financial Situation Report of the Nepal Rastra Bank (NRB) published on Wednesday.

However, the export-import ratio increased to 9.5 per cent in the review period from 8.2 percent in the same period of the previous year.

In the five months of 2020/21, merchandise exports increased by 5.1 per cent to Rs. 50.06 billion compared to an increase of 27.0 per cent in the same period of the previous year.

Destination-wise, exports to India and other countries increased by 8.6 per cent and 0.8 per cent respectively whereas exports to China decreased by 55.2 per cent.

Exports of cardamom, jute items, polyster yarn and threads, noodles and pashmina increased whereas exports of palm oil, pulses, zinc sheet, woolen carpet and textiles decreased in the review period.

Likewise, merchandise imports decreased by 9.6 per cent to Rs. 525.50 billion compared to a decrease of 4.2 per cent a year ago.

Imports from India, China and other countries decreased by 1.1 per cent, 24.4 per cent, and 20.8 per cent respectively.

Imports of crude soybean oil, rice, M.S. billet, telecommunication equipment and parts and coal increased whereas imports of petroleum products, aircraft spare parts, crude palm oil, machinery and parts, and transport equipment and parts decreased.

 

Inflation 2.9 per cent

The year-on-year consumer price inflation has gone down to 2.93 per cent in the first five months of the current FY from 6.55 per cent a year earlier. Food and beverage inflation stood at 5.23 percent whereas non-food and service inflation stood at 1.16 percent in the review period.

The price of fruit, ghee and oil, vegetables, and pulses and legumes sub-groups rose by 14.75 per cent, 13.01 per cent, 11.44 per cent and 10.74 per cent respectively.

The Kathmandu Valley, Terai, Hill and Mountain witnessed 3.71 per cent, 2.35 per cent, 3.95 per cent and 4.22 per cent inflation respectively. These regions had witnessed 7.60 per cent, 6.66 per cent, 5.27 per cent and 4.83 per cent inflation respectively a year ago.

 

Remittances up

Remittance inflows increased by 10.9 per cent to Rs. 416.81 billion in the review period against a decrease of 0.2 per cent in the same period of the previous year.

In the US dollar terms, remittance inflows increased by 6.4 per cent to 3.52 billion in the review period compared to an increase of 0.4 per cent in the same period of the previous year.

Number of Nepali workers taking approval for foreign employment decreased by 77.9 per cent which had increased by 11.8 per cent last year.

Likewise, the current account recorded a deficit of Rs. 21.32 billion in the review period compared to a deficit of Rs. 65.13 billion of the previous year.

Balance of Payments (BOP) registered a surplus of Rs. 106.48 billion this year as compared to a surplus of Rs. 23.30 billion last year.

Published in The Rising Nepal daily on 14 January 2021.