Nepal’s Foreign Trade Nears Rs1.3 Trillion as Election Spending Boosts Economic Activity

KATHMANDU: Nepal’s economy is showing signs of renewed momentum as the country heads into elections, with foreign trade expanding sharply in recent months, according to data from the Department of Customs.

Statistics for the first seven months of the current fiscal year (mid-July to mid-February) show Nepal’s total foreign trade has reached Rs1.291 trillion, indicating growing domestic demand and increased economic circulation linked to election-related spending.

Of the total trade volume:

• Imports: Rs1.123 trillion
• Exports: Rs168.14 billion
• Trade deficit: Rs955 billion

The figures suggest both imports and exports picked up pace, particularly in the last month.

Sharp One-Month Surge in Trade

Nepal’s total foreign trade stood at Rs1.081 trillion by mid-January, but climbed close to Rs1.3 trillion within a single month — a rise of more than Rs210 billion.

The data shows a surge in both imports and exports during this period, reflecting heightened market activity.

Economists note that elections typically stimulate both internal and external economic sectors. Government procurement increases, fuel consumption rises, and spending on logistics, transportation, and campaign-related supplies expands. These factors tend to drive import growth while also encouraging short-term export activity.

Overall Trade Improves by Nearly 16 Percent

Total foreign trade expanded 15.76 percent compared to the same period last fiscal year, when the trade volume stood at around Rs1.115 trillion.

Imports alone rose 13.65 percent year-on-year, reaching Rs1.123 trillion, up from Rs988.58 billion last year.

Exports also climbed, reaching Rs168.14 billion, reflecting a notable improvement in export performance. The export share in total trade has also improved compared to last year, indicating slightly better external sector balance.

Trade Deficit Still Large but Growth Moderates

Despite improvements in exports, Nepal’s trade deficit remains significant at Rs955 billion for the seven-month period.

However, the rate of deficit expansion has moderated due to faster export growth. Last year’s deficit for the same period stood at Rs861 billion, meaning the deficit has grown but at a slower pace relative to trade expansion.

Currently:

• Import share: 86.98%
• Export share: 13.02%
• Import-export ratio: 6.68

This means Nepal imports goods worth nearly Rs6.7 for every Rs1 exported, though this ratio has improved from 7.77 last year — a signal that export performance is strengthening gradually.

Petroleum Imports Exceed Total Exports

One striking trend in the data is Nepal’s heavy reliance on energy imports.

In the first seven months alone, Nepal imported petroleum products worth Rs180.74 billion — a figure that exceeds the country’s total export earnings during the same period.

Other major import categories include:

• Edible oil: Rs93.75 billion
• Iron and steel: Rs77.85 billion
• Electrical equipment and parts: Rs77.69 billion
• Machinery and mechanical equipment: Rs77.53 billion
• Vehicles: Rs64.84 billion
• Precious metals and jewelry: Rs47.79 billion
• Fertilizer: Rs42.63 billion
• Vegetables: Rs22.25 billion

Imports of construction materials and machinery suggest that development and infrastructure activity has been gaining pace.

Soybean Oil Dominates Both Imports and Exports

Crude soybean oil remains Nepal’s single largest import item, valued at Rs70.99 billion in seven months.

Other top imports include:

• Diesel: Rs69.91 billion
• Petrol: Rs38.13 billion
• Cooking gas: Rs31.85 billion
• Smartphones: Rs26.68 billion
• Gold: Rs21.20 billion

Interestingly, soybean oil is also Nepal’s top export commodity. The country exported soybean oil worth Rs66.78 billion during the same period.

Other major export products include:

• Cardamom: Rs8.61 billion
• Sunflower oil: Rs5.78 billion
• Carpets: about Rs5.7 billion
• Coffee, tea, and spices: Rs12.26 billion
• Yarn and fiber products: Rs7.64 billion
• Ready-made garments: Rs5.15 billion

Vegetable oils and related processed products continue to dominate Nepal’s export structure.

India Remains Nepal’s Largest Trade Partner

India continues to dominate Nepal’s foreign trade landscape.

During the review period:

• Imports from India: Rs629 billion
• Exports to India: Rs137 billion

China is Nepal’s second-largest trade partner:

• Imports from China: Rs235 billion
• Exports to China: about Rs900 million

Other notable partners include:

• Argentina: Rs66.11 billion in imports
• United Arab Emirates: Rs41 billion
• United States: Rs17.44 billion imports and Rs11.27 billion exports

The data highlights Nepal’s continued dependence on a limited number of trading partners, especially India.

Election Cycle Revives Economic Momentum

Analysts say the current rise in trade is consistent with historical patterns in Nepal, where elections tend to stimulate short-term economic activity.

Increased public spending, higher fuel consumption, vehicle purchases, and logistical demand during election cycles often boost imports. At the same time, stronger market circulation and improved business sentiment help exports recover modestly.

If this momentum continues beyond the election period, economists believe it could signal a broader recovery in Nepal’s post-slowdown economy.