Nepal’s foreign trade declines by Rs 36.69 billion in first 10 months of fiscal year

KATHMANDU: Nepal’s total foreign trade has seen a decline of Rs 36.69 billion in the first 10 months of the current fiscal year, as per records from the Department of Customs (DoC).

From mid-July 2023 to mid-May 2024, Nepal’s foreign trade amounted to Rs 1.429 trillion, down from Rs 1.466 trillion in the same period last year. Economists attribute this decline to the ongoing economic slowdown affecting the country.

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

Both imports and exports saw a decline during the review period. The DoC reported that merchandise imports stood at Rs 1.303 trillion, down from Rs 1.335 trillion in the previous fiscal year. Export revenue also fell by 3.61 percent, with goods worth Rs 126.17 billion exported during this period.

The country’s trade deficit reached Rs 1.177 trillion, a 2.26 percent decrease from the corresponding period last year. Export earnings accounted for 8.83 percent of the total trade volume, while imports made up 91.17 percent.

The import-to-export ratio rose to 10.33, indicating that Nepal spends Rs 10.33 on imports for every Re 1 earned from exports.

Monthly imports peaked at Rs 148 billion during the Dashain and Tihar festivals between mid-September and mid-October but declined almost every month afterward.

The decline in trade volume has also impacted the government’s revenue collection. With a target of Rs 1.422 trillion for the current fiscal year, the government has achieved less than 60 percent of this goal, with only two months remaining in the fiscal year.

In a related development, Nepal imported over 110,000 two-wheelers in the first 10 months of this fiscal year. Of these, 63,163 units were assembled domestically, while 47,425 units were imported as finished products, including 5,888 electric scooters.