Trade Deficit Of Nepal Jumps To Rs. 1.57 Trillion
June 22, 2022 | Investopaper
The trade deficit has widened with the increase in imports due to dependence on foreign commodities including daily necessities. Compared to the corresponding period of the previous year, the trade deficit has increased by about Rs 315 billion in the first eleven months of the current fiscal year.
According to the data released by the Customs Department, the trade deficit from Shrawan to Jestha (11 months) of the current fiscal year 2078/79 has reached Rs 1.577 trillion. The trade deficit during the same period last year was Rs 1.262 trillion.
The import of goods has reached Rs. 1.763 trillion in the eleven months period, which stood at Rs 1.383 trillion in the same period last year.
Although the export has increased by 53.30 percent as compared to the corresponding period of previous fiscal year, the value of exports is significantly lower than the imports. About Rs 185.83 billion worth of items have been exported in the first eleven months of this fiscal year.
International Trade Situation Of Nepal
| SN | Trade Indicators | FY 2078/79 (First 11 Months) | FY 2077/78 (First 11 Months) | Change (%) |
| 1 | Imports (Rs.in `000) | 1,763,223,096 | 1,383,364,924 | 27.46 |
| 2 | Exports (Rs.in `000) | 185,837,018 | 121,253,959 | 53.26 |
| 3 | Trade Deficit (Rs.in `000) | 1,577,386,078 | 1,262,110,965 | 24.98 |
| 4 | Total Foreign Trade (Rs.in `000) | 1,949,060,114 | 1,504,618,883 | 29.54 |
| 5 | Imports/Exports Ratio | 9.49 | 11.41 | -16.84 |
| 6 | Exports Share to Total Trade (%) | 9.53 | 8.06 | 18.31 |
| 7 | Imports Share to Total Trade (%) | 90.47 | 91.94 | -1.61 |
Source: Department of Customs
The decline in remittance inflows and increase in imports of goods has led to decline in foreign exchange reserves in the country. The trade deficit has also affected the economy. Foreign exchange reserves are under pressure due to high trade deficit and declining remittance income.
Although the government has introduced the concept of Special Economic Zone (SEZ) for export by increasing production to reduce trade deficit, effective implementation has not been possible. The government had announced to build SEZs in 14 places.
Strategies have been formulated to promote export by becoming self-reliant in the production of cement, medicine, iron bars, furniture, footwear, etc., and to increase production based on local raw materials and labor by protecting domestic, small and medium enterprises. In order to increase exports, a policy of subsidizing certain items has been adopted. Cash subsidy has been implemented for herbs, cardamom, tea, carpets, pashmina, jute goods, readymade garments and other items.
Thanks for this nice article. While analysing trade deficit, trade deficit as a percentage of GDP is one of the most important measure, you have missed this one.