Half-yearly economic review depicts positive trend for indicators; Forex reserves reach Rs 1816.57 billion

Kathmandu / Feb 6: The half-yearly review of the current fiscal year 2080-81 BS (2023-24) suggests positive trends in various economic and financial indicators. According to the central bank’s assessment, based on the six months’ data ending in mid-January, there is an improvement in overall economic and financial indicators.

Remittance inflows increased by 25.3 per cent to reach Rs.733.22 billion in the review period, compared to a 24.3 per cent increase in the same period last year. In US Dollar terms, remittance inflows rose by 22.6 per cent to 5.52 billion compared to an increase of 13.9 per cent in the same period of the previous year.

In the review period, the number of Nepali workers, both institutional and individual, taking first-time approval for foreign employment stands at 207,970 and taking approval for renewed entry stands at 135,435. In the previous year, such numbers were 275,643 and 142,548 respectively.

Net transfer increased 24 per cent to Rs.799.51 billion in the review period. Such a transfer had increased 22.7 per cent in the same period of the previous year.

Balance of Payments (BOP) remained at a surplus of Rs.273.52 billion in the review period against a surplus of Rs.92.15 billion in the same period of the previous year. In US Dollar terms, the BOP remained at a surplus of 2.06 billion in the review period against a surplus of 697.4 million in the same period of the previous year.

Gross foreign exchange reserves increased by 18.0 per cent to Rs.1816.57 billion in mid-January 2024 from Rs.1539.36 billion in mid-July 2023. In US dollar terms, the gross foreign exchange reserves saw an increase of 16.9 per cent to reach 13.69 billion in mid-January 2024 from 11.71 billion in mid-July 2023.

Similarly, broad money (M2) increased by 6.4 per cent while on a y-o-y basis, M2 expanded by 14.3 per cent.

Deposits at banks and financial institutions rose by 6.6 per cent and private sector credit increased by 4 per cent. On a y-o-y basis, deposits increased by 14.9 per cent and private-sector credit increased by 4.9 per cent. The y-o-y consumer price inflation moderated to 5.26 per cent in mid-January 2024 compared to 7.26 per cent a year ago. Food and beverage category inflation stood at 5.77 per cent whereas non-food and service category inflation stood at 4.85 per cent in the review month.

As the report states, the y-o-y price index of ghee and oil, vegetables, meat & fish and transportation sub-categories exhibited a downward trend in mid-January 2024. Additionally, the price index of spices and sugar and sugar products are also moderating. During the review month, the y-o-y import price index, salary and wage rate index and the wholesale price index were also moderated. These factors contributed to a moderated consumer price inflation

Under the Food and Beverage Category, the y-o-y price index of ghee and oil, vegetable and meat and fish sub-category decreased by 13.07 per cent, 1.04 per cent and 0.06 per cent respectively in the review month. The y-o-y price index of the spices sub-category increased by 35.60 per cent, cereal grains and their products by 11.38 per cent, pulses and legumes by 11.14 per cent, milk products and eggs by 10.29 per cent and fruit by 10.15 per cent.

Under the Non-Food and Services Category, the y-o-y price index of the transportation sub-category decreased by 1.62 per cent in the review month. The y-o-y price index of the recreation and culture subcategory increased by 12.84 per cent, miscellaneous goods and services by 9.73 per cent, education by 8.92 per cent, furnishing and household equipment by 5.18 per cent and clothes and footwear by 4.96 per cent.

The y-o-y consumer price inflation in the Kathmandu Valley, Terai, Hill and Mountain region stood at 5.76 per cent, 4.78 per cent, 5.40 per cent and 6.57 per cent respectively in the review month. Such inflation in these regions was 6.93 per cent, 7.49 per cent, 7.30 per cent and 6.69 per cent respectively a year ago.

The y-o-y wholesale price inflation stood at 3.36 per cent in mid-January 2024 compared to 9.82 per cent a year ago. The y-o-y wholesale price index of consumption goods, intermediate goods and capital goods increased 6.16 per cent, 1.99 per cent and 2.71 per cent respectively. The y-o-y wholesale price index of construction materials decreased by 1.08 per cent in the review month. The y-o-y salary and wage rate index increased 5.56 per cent in mid-January 2024 compared to 10.27 per cent a year ago. The y-o-y Salary index and Wage rate index increased by 1.05 and 6.92 per cent respectively in the review month.

Imports fell by 3.1 per cent, exports by 7.2 per cent and the trade deficit by 2.6 per cent. RSS