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Whopping growth in imports shades Nepal's macroeconomic look

Written by  Published in Trade Friday, 16 August 2013 22:04


Kathmandu, August 16 (CNS) -- The soaring merchandise imports in the last fiscal year 2012/13 which accounted to almost one third of the total Gross Domestic Product of 1.71 trillion rupees has painted the economic picture muddy in Nepal.

According to the latest data released by the central bank, Nepal Rastra Bank, merchandise imports surged by 20.6 percent to 556.74 billion rupees in the review year. Such imports had risen by 16.5 percent to Rs. 461.67 billion in the previous year. However exports went up by mere 3.6 percent to 76.92 billion rupees in fiscal 2012/13.

Due to the high growth rate of imports compared to exports, total trade deficit surged by 23.9 percent to Rs. 479.82 billion in the review year. Such deficit had expanded by 16.7 percent in the previous year.

Trade deficit with India surged by 26.5 percent during the review year compared to a growth of 14.3 percent in the previous year. Likewise, trade deficit with other countries grew by 19.0 percent in the review year compared to an increase of 21.5 percent in the previous year.

The ratio of export to import declined to 13.8 percent in the review year from 16.1 percent in the previous year. The share of India in Nepal's trade increased marginally to 66.0 percent in the review year from 65.1 percent in the previous year.

Given that slowdown in exports to both India and other countries, export figures witness the sluggish trend. Total merchandise imports surged in the review year due mainly to the rapid increase in the imports from India.  Imports from India soared by 22.6 percent during review year compared to a growth of 14.3 percent in the previous year. Likewise, imports from other countries rose by 16.9 percent in the review year compared to an increase of 20.9 percent in the previous year.

Imports from India increased primarily owing to an increase in the imports of petroleum products, vehicles and spare parts, cement, rice and chemical fertilizers, among others. Likewise, imports from other countries increased mainly on account of an increase in the imports of telecommunication equipment parts, silver, readymade garments, pipe and pipe fittings and chemical fertilizers, among others.

Balance of Payments Satisfactory

The overall BoP recorded a surplus of 68.94 billion rupees in the fiscal year 2012/13 compared to a surplus of 131.63 billion rupees in the previous year.

The current account posted a surplus of 57.6 billion billion in the review year compared to a surplus of 75.98 billion rupees in the previous year.

Under transfers, workers’ remittances rose by 20.9 percent to 434.58 billion rupees in the review year compared to an increase of 41.8 percent in the previous year.

Likewise, under financial account, foreign direct investment of 9.08 billion rupees was recorded during the review year compared to such investment of 9.20 billion rupees in the previous year.

Foreign exchange reserves increased

The gross foreign exchange reserves have increased by 21.4 percent to 533.30 billion rupees in mid-July 2013 from a level of 439.46 billion in mid-July 2012. Such reserve had increased by 61.5 percent in the previous year.  On the basis of the trend of imports, the existing level of reserves is sufficient for financing merchandise imports of 11.7 months and merchandise and service imports of 10.1 months.

© Corporate News Syndicate

Read 1371 times Last modified on Friday, 16 August 2013 22:26

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