A Widening Trade Deficit
Nepal´s trade deficit has widened to Rs295.96 billion with the share of imports standing at 88.5 per cent of the total trade during the first seven months of the current fiscal year 2012/13. Trade deficit, however, rose by 28.9 per cent due to an increase in imports of petroleum products.
Experts suggest that rising import bills during growing consumption in the country and a decrease in supply were reasons behind the mounting trade deficit despite total trade volume increasing by 21.8 percent to Rs 384.36 billion in the current fiscal year.
According to the Trade and Export Promotion Center (TEPC), Nepal’s total exports increased by only 3.7 per cent to Rs44.2 billion while total imports increased by 24.7 per cent to Rs340.16 billion. Nepal’s largest imports are petroleum products that increased by over 22 per cent to Rs60.78 billion during the review period. Furthermore, Nepal’s second largest imports iron and steel products were worth Rs34.12 billion, showing an increase of 21.7 per cent. Although India is Nepal’s largest trading partner, the latter’s export to India increased by a meager 1.8 per cent which shows that Nepal has to tighten its trading sector to generate revenue. It is interesting to note that imports to Nepal from India increased by 26.9 per cent to Rs222.67 billion.