Economic indicators disappointing

The latest report of the Nepal Rastra Bank has shown that most of the key economic indicators in the last Fiscal Year 2021/22 are highly disappointing. Consumer price inflation, depleting foreign exchange reserves, current account deficit, stunted growth of remittance inflow, and decreased capital transfer have been the features of our economy.

The consumer price inflation almost doubled to 8.08 per cent in mid-July 2022 against 4.19 per cent of the previous year, the Nepal Rastra Bank said in its annual report on the country's macroeconomic situation.

The inflation is pushed up by non-food and services inflation which remained at 9.03 per cent by the end of the last fiscal year compared to just 2.94 per cent in mid-July 2021.

The price of ghee and oil skyrocketed last year with about 26.13 per cent inflation, pulses, legumes, and tobacco prices were up by 9.92 per cent and 9.84 per cent, while transportation costs increased by 15.82 per cent. As the price of petroleum products rapidly increased in the international market, it forced the government to hike the price of fossil fuel and the fare of passenger and cargo transport. According to the central bank, the global rise in fuel and food prices, supply chain disruptions and devaluation of Nepalese currency against the US dollar contributed to building up inflationary pressures during the second half of 2021/22. Likewise, the current account remained at a deficit of Rs. 623.33 billion during 2021/22 compared to a deficit of Rs.333.67 billion in the previous year.

Likewise, the Balance of Payments (BOP) remained at a deficit of Rs. 255.26 billion in the review year against a surplus of Rs. 1.23 billion in the previous year.

Gross foreign exchange reserves decreased by 13.1 per cent to Rs. 1215.80 billion in mid-July 2022 from Rs. 1399.03 billion in mid-July 2021.

However, remittance inflows increased by 4.8 per cent to Rs.1007.31 billion during 2021/22 compared to 9.8 per cent in the previous year.