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Global goods trade posted a strong uptick in early 2025 driven by importers frontloading purchases ahead of anticipated higher tariffs; however, weakening export orders suggest that this momentum may not be sustained. The latest WTO Goods Trade Barometer rose to 103.5 — up from 102.8 in March, while the forward-looking new export orders index fell to 97.9, pointing to weaker trade growth later in the year.

The Goods Trade Barometer is a composite leading indicator for world trade, providing real-time information on the trajectory of merchandise trade relative to recent trends. Barometer values greater than 100 are associated with above-trend trade volumes, while barometer values less than 100 suggest that goods trade has either fallen below trend or will do so in the near future.

While the current barometer reading of 103.5 (represented by the blue line in the chart) exceeds both the baseline value of 100 and the quarterly trade volume index (represented by the black line), the decline in export orders and the temporary nature of frontloading suggest that trade growth may slow in the months ahead as enterprises import less and start to draw down accumulated inventories.

The most predictive barometer component, the new export orders index (97.9), has dipped below its baseline value of 100 into contraction territory, signalling weaker trade growth later in the year. On the other hand, most other barometer components have risen above trend. Transport-related indices, including air freight (104.3) and container shipping (107.1), reflect increased movement of goods. The automotive products index (105.3) also is above trend due to resilient vehicle production and sales. The electronic components index (102.0) has climbed above trend after underperforming in 2023 and 2024. Finally, the raw materials index (100.8) shows only modest growth, just above baseline.

World merchandise trade volume growth moderated in the fourth quarter of 2024 but it is likely to rebound in the first quarter of 2025 based on the goods barometer and preliminary trade data. The WTO Secretariat's Global Trade Outlook and Statistics report of 16 April 2025 projected stable trade growth of 2.7% for 2025 under a low-tariff scenario reflecting policy conditions at  the start of the  year, and a ­‑0.2% contraction under actual policies in place as of mid-April. Subsequent developments, including US-China and US-UK trade agreements as well as higher tariffs on steel and aluminium, have nudged the forecast up and down slightly leaving the overall outlook basically flat at 0.1%.  However, trade contraction is possible, for example if US reciprocal tariffs are reinstated, or if trade policy uncertainty spreads globally. Source WTO

The government has floated a preliminary draft of the new Aviation Policy, 2025, for public consultation, outlining ambitious measures to boost international connectivity, promote investment and modernize the aviation sector. The draft prepared by the Ministry of Culture, Tourism and Civil Aviation, will replace the Aviation Policy, 2006, once it is finalized. 

The government plans to establish a permanent and independent accident investigation mechanism, ending the long long-standing practice of forming commissions after every aviation accident. This move is expected to strengthen Nepal’s commitment to international aviation safety standards.

The draft includes a proposal to grant fifth freedom traffic rights to international carriers operating from Gautam Buddha International Airport of Rupandehi and Pokhara International Airport of Kaski.

These two international airports, which are built using foreign loans, have been struggling to get international flights. 

Fifth freedom rights authorize an airline to fly passengers and cargo between two foreign countries as part of a route that originates or ends in its own country. Bhutanese airlines are currently flying passengers between Kathmandu and New Delhi on flights that originate in Paro using the fifth freedom flights granted by Nepal.

The draft proposes stricter rules on aircraft imports. As per the draft, pressurized aircraft that have completed more than 50 percent of their economic design life or over 35,000 pressurization cycles cannot be imported into the country. This is a stricter standard than the current thresholds of 75 percent life and 45,000 cycles. For non-pressurized aircraft, the maximum age limit allowed for imports is 20 years. The draft also allows Nepali citizens and institutions to own private aircraft. Such aircraft, however, cannot be used for commercial purposes.

The policy also signals a shift toward more liberal and reciprocal air service agreements, with the aim of gradually adopting an open skies policy. Third-party code-sharing and transparent allocation of routes and flight frequencies based on the capacity of Nepali carriers are among the features aimed at enhancing competitiveness.

Similarly, the draft proposes to raise the ceiling for foreign investment in international airlines based in Nepal from 80 percent to 90 percent. However, the cap for domestic airlines will remain unchanged at 49 percent. In addition, the government plans to provide land at non-operational airports to institutions engaged in aircraft maintenance, pilot training, or aircraft design and manufacturing.

To support aviation training, the draft offers tax exemptions for flying schools during their first three years of operation. It also proposes a co-investment model involving federal, provincial, and local governments for new airport construction. However, new airports will be approved only if their long-term operational viability can be ensured.

The price of gold has increased by Rs 300 per tola in the domestic market on Wednesday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 192, 300 per tola today.

Similarly, the price of silver has increased by Rs 35 and is being traded at Rs 2, 175 per tola today.

Residential housing loans have shown sluggish growth despite banks and financial institutions (BFIs) prioritizing the sector and offering competitive rates. 

According to the latest data from the Nepal Rastra Bank, housing loans up to Rs 20m extended by commercial banks increased by just 4.07 percent over the past year, reflecting the broader slowdown in credit expansion and the economy.

Total housing loans under Rs 20m increased to Rs 325.36bn in mid-May 2025, up from Rs 312.63bn in mid-May last year. This reflects a low appetite for residential borrowing even though interest rates have dropped to some of the lowest levels yet.

Although banks are offering home loans at premiums of less than one percent above their base rates, credit disbursement has remained below expectations. Bankers say that although housing and real estate loans are a top priority, weak consumer confidence and sectoral distress have hindered credit uptake.

The Nepal Rastra Bank (NRB) has been adopting more flexible policies to boost lending in the real estate sector. The central bank last year reduced the risk weight on housing loans above Rs 5m to 125 percent through a monetary policy review. It allowed homebuyers to use up to 70 percent of their income for loan repayment—principal and interest combined. Before that, only 50 percent of a borrower’s income could be allocated for loan installment payments.

Bankers attribute the slowdown primarily to the ongoing economic downturn, which has dampened individual income and weakened borrowing capacity. “The majority of people can no longer verify stable income sources, making it difficult to qualify for new loans,” one banker said.

Among commercial banks, NIC Asia Bank has the highest exposure to residential housing loans with Rs 48.7bn invested in loans under Rs 20m. Global IME Bank was next with a total housing loan portfolio of Rs 39.94bn. Nepal SBI Bank has the lowest at Rs 2.42bn.

The real estate sector itself is going through a severe downturn, with banks failing to offload their non-banking assets despite publishing auction notices repeatedly. When borrowers default on loans, banks and financial institutions (BFIs) acquire the property pledged as collateral. Banks are supposed to sell off these properties at the earliest and recover their investment, but a slowdown in the real estate sector means banks are not finding buyers. This accumulation of non-banking assets is hitting bank profitability.