Nepal’s foreign trade declines by 5.32 percent

 

In a clear indication of an economic slowdown, the country’s imports have declined by 5.06 percent in the first two months of the current fiscal. The country’s total import bill stood at Rs 259.749bn in the first two months of FY 2023/24 compared to Rs 273.599bn during the same period of FY 2022/23. 

Along with imports, Nepal’s exports also decreased 7.7 percent during the review period. The country exported goods worth 26.44bn in the first two months of the current fiscal compared to Rs 28.68bn during the same period of the last fiscal year. 

Despite major festivals such as Dashain and Tihar approaching, the imports in the month of Bhadra (mid-August-mid-September) surged meagerly compared to Shrawan (mid-July-mid-August). The latest foreign trade statistics from the Department of Customs show Nepal’s imports in Bhadra grew 0.98 percent. In previous years, the imports usually used to grow in Bhadra, the main month for importing essential goods for Dashain and Tihar.

Banks have reported fewer letters of credit (LC) issued during this period compared to the corresponding period last year, in an indication that the slowdown has hit the banking sector too. Banks’ staff had to work even during holidays to issue LCs during this period in previous years. Bankers say demand for loans and LCs has not come as expected. 

With imports not growing as expected and domestic economic activities subdued, the government’s revenue has remained dismal during the festive season. The initial two months of FY 2023/24 have seen no significant surge in revenue collection.

In fact, the current fiscal has witnessed a weaker performance in revenue collection compared to the previous fiscal. In the first two months of FY 2023/24, government revenue collection amounted to Rs 141.07bn, slightly lower than the Rs 143.81bn achieved during the same period in FY 2022/23.

The Customs Department's data show imports of major products including industrial products have declined in the current fiscal. The import of petroleum products has declined 15.286 percent in FY 2023/24. The country’s petroleum products' import bill stood at Rs 37.147bn in FY 2023/24 against Rs 43.850bn in FY 2022/23.

The imports of crude edible oils also plunged sharply. The imports of soybean oil dropped massively to Rs 2.96bn this fiscal compared to Rs 9.08bn in the last fiscal. The same is the story of palm oil whose imports plunged to Rs 2.31bn this fiscal compared to Rs 6.61bn.   

The onset of the festive period has failed to boost the imports of smartphones, with imports plunging by 13.18 percent in the first two months of FY 2023/24.