Nepal’s Export Trade Satisfactory: NRB

Kathmandu / Dec 21: Nepal Rastra Bank (NRB) has stated that Nepal’s export trade has remained satisfactory in the four months of the current fiscal year 2076/77 BS (2019/20).

In four months of 2019/20, merchandise exports increased 23.9 percent to Rs.36.28 billion compared to an increase of 11 percent a year ago. Destination-wise, exports to India increased 45.6 percent whereas exports to China and other countries decreased 6 and 4.7 percent respectively, Nepal Rastra Bank (NRB), the central bank, stated in its review of financial situation.

Mainly exports of palm oil, cardamom, yarn (polyester and other), jute goods, medicine (ayurvedic), among others, increased whereas exports of zinc sheet, wire, readymade garment, juice, woolen carpet, among others, decreased in the review period.

In four months of 2019/20, merchandise imports decreased 6.9 percent to Rs.450.30 billion against an increase of 35.8 percent in the same period of the previous year. Destination-wise, imports from China increased 12.8 percent whereas imports from India, and other countries decreased 10.9 percent and 8.7 percent respectively. Mainly imports of crude palm oil, other machinery and parts, hot rolled sheet in coil, electrical equipment, electrical goods, among others, increased whereas imports of M.S. billet, petroleum products, gold, aircraft spareparts, cement, among others, decreased in the review period.

Based on customs points, exports from Birgunj Customs Office, Biratnagar Customs Office, Mechi Customs Office, Tatopani Customs Office and Kanchanpur Customs Office increased whereas exports from other customs points decreased. On the import side, imports from Dry Port Customs Office, Tatopani Customs Office, Kanchanpur Customs Office and Rasuwa Customs Office increased whereas imports from other customs points decreased in the review period.

Total trade deficit narrowed down 8.9 percent to Rs.414.02 billion in the four months of 2019/20. Such deficit was expanded 37.8 percent in the same period of the previous year. The export-import ratio increased to 8.1 percent in the review period from 6.1 percent in the corresponding period of the previous year.

Major highlights

Giving the major highlights of the review, the Central Bank stated that inflation remained 5.76 percent on y-o-y basis and 6.27 percent on average during four months; imports decreased 6.9 percent and exports increased 23.9 percent.

Similarly, remittances decreased 2.3 percent; the Balance of Payments remained at a surplus of Rs.27.29 billion; and the gross foreign exchange reserves stood at Rs.1103.12 billion. This level of reserve is sufficient to cover the prospective merchandise and services imports for 8.7 months.

The Federal Government spending based on banking transactions amounted to Rs.219.17 billion and revenue collection Rs.275.02 billion. Broad money (M2) expanded 3.1 percent. On y-o-y basis, M2 expanded 15.4 percent. Deposits at Banks and Financial Institutions expanded 3.1 percent and bank credit to the private sector expanded 5.0 percent. On y-o-y basis, deposits increased 17.4 percent and credit 15.6 percent.

In the review month, the Kathmandu Valley witnessed 6.50 percent inflation followed by 6.04 percent in the Terai, 4.56 percent in the Hill and 4.01 percent in the Mountain. These regions had witnessed 4.50 percent, 3.79 percent, 4.31 percent and 4.62 percent inflation respectively a year ago.

The y-o-y consumer price inflation in Nepal in the review month and in India (November 2019) stood at 5.76 percent and 5.54 percent respectively. Such rate of inflation was 4.15 percent in Nepal compared to 2.33 percent in India a year ago.

Wholesale Price Inflation

The y-o-y wholesale price inflation stood at 8.94 percent in the review month compared to 6.93 percent a year ago. In the review month, price of food under primary group and prices of food, beverage and tobacco under manufactured group rose significantly.

Based on broad economic classification, prices of consumption goods, intermediate goods and capital goods increased 25.20 percent, 1.21 percent and 2.21 percent respectively. The wholesale price of construction materials dropped 3.19 percent in the review month.

Salary and Wage Rate Index

The y-o-y salary and wage rate index increased 10.45 percent in the review month compared to 8.90 percent a year ago. In the review month, salary index and wage rate index increased 13.56 percent and 9.61 percent respectively. RSS