KATHMANDU, Nov 3: Country's trade deficit, which was increasing at an alarmingly high rate until a month ago, has slowed in the second month of Fiscal Year 2015/16 due to ongoing protest of Madhesi parties in the Tarai region.
The 'Current Macroeconomic Situation of Nepal (Based on Two Months' Data of 2015/16) released by Nepal Rastra Bank (NRB) on Sunday shows trade deficit during the first two months (mid-July to mid-September) decreased by 17.8 percent to Rs 91.71 billion compared to a rise of 24.9 percent in the same period of 2014/15.
The trade deficit is expected to fall further as trade between India and Nepal, which was affected by agitating parties in the initial days, has now come to a grinding halt due to the undeclared economic blockade imposed by India. While this is the data of the first month of the strike imposed by the Madhesi parties, the trade volume has come down significantly in the subsequent months. Madhesi parties are continuing their protest for the last 81 days.
Trade deficit with India declined by 19.6 percent to Rs 58.79 billion, down from the total deficit of Rs 73.09 billion in the corresponding period of the last fiscal year. Trade deficit with China, however, increased by 6.2 percent in the review period to Rs 15.23 billion, compared to the deficit of Rs 14.34 billion in the same period of last fiscal year. Similarly, trade deficit with other countries fell by 26.8 percent to Rs 17.69 billion.
According to the report, country's merchandise exports fell by 15.2 percent to Rs. 12.24 billion in the first two months of 2015/16 compared to a drop of 4.8 percent to Rs. 14.43 billion in the same period of the previous fiscal year. Country's total exports decreased due to fall in exports to India, China and other countries.
Merchandise imports also fell by 17.5 percent to Rs 103.95 billion. Such imports had gone up by 20.5 percent to Rs 126.02 billion in the same period of the previous fiscal year. "The slowdown in imports is attributed mainly to drop in imports of petroleum products, among others, as well as supply constraints due to strike in Tarai-Madhesh region," NRB states in the report.
Imports from India fell by 19.9 percent in the review period compared to a rise of 18.7 percent in the same period of the previous fiscal year. The country imported goods worth only Rs 65.55 billion in the first two months of the current fiscal year from India, compared to Rs 81.85 billion in the same period last year.
The protest in Tarai districts also affected country's exports to India, which observed a decline of 22.8 percent to Rs 6.76 billion in the review period. Similarly, exports to other countries decreased by 9.7 percent to US$ 50.9 million in the review period compared to a rise of 3.5 percent in the same period of previous fiscal year.
Meanwhile, remittances inflow increased by 27.5 percent to Rs 107.67 billion in the review period in contrast to a decline of 4 percent in the same period of previous fiscal year.
Published on: My Republica (November 3, 2015)
