Nepal’s trade deficit narrows to Rs 579 bn in the first five months of FY 2023-24

KATHMANDU: In a recent revelation, the Department of Customs (DoC) reports that Nepal has marked a trade deficit of Rs 579 billion during the initial five months of the current fiscal year, showcasing a significant decline in import expenses as a contributing factor.

The records indicate a 3.09 percent reduction in the country’s trade deficit from mid-July to mid-December compared to the same period last year. During this review period, Nepal managed to cut down Rs 22 billion in expenses on imported goods, reflecting a noteworthy decrease in imports.

Amid the prevailing economic slowdown witnessed globally, including in Nepal, both exports from and imports to the country experienced a dip. The DoC reports a 6.09 percent decrease in Nepal’s export earnings, amounting to Rs 63.20 billion, while import expenses dropped by 3.39 percent, totaling Rs 642.20 billion.

The overall trade volume also shrank by 3.64 percent, reaching Rs 705.41 billion during this period.

Experts suggest that the reduction in import expenses may be attributed to the decrease in the import of capital goods due to the ongoing economic recession. However, concerns are raised about the potential negative impact on the country’s quest for higher economic growth.

Concurrently, Nepal’s export potential witnessed a decline over successive months in the review period. The country’s export earnings represented 9.48 percent in the first month of fiscal year 2023/24, only to decrease to 8.96 percent in the last month.

Major export items, including palm oil, woolen carpets, tea, yarn, and jute products, observed a decline in exports. Meanwhile, there was a substantial decrease in spending on significant import items such as crude edible oil and iron and steel. The economic dynamics and global uncertainties continue to shape Nepal’s trade landscape, prompting experts to closely monitor the evolving trends for future economic projections.