Rising consumption pushes foreign trade up 13pc

ATHMANDU, Oct 3 - Buoyed by increased consumption -- thanks to higher remittance inflows -- Nepal’s foreign trade expanded by Rs. 32 billion to add up to Rs. 286.9 billion in Fiscal Year 2007/08.

The growth is about 13 percent, compared to Fiscal Year 2006/07, according to a central bank report.

Nepal’s trade with India grew by 16 percent and touched Rs. 183.15 billion, whereas trade with third countries grew at a slower pace of 7.5 percent to reach Rs. 103.75 billion.

The flourishing commerce, however, neither brought cheer to exporters nor contributed to creating an industrial base or fresh employment opportunities in the country.

Internal instability and labour stir largely affected the manufacturing sector. In addition, lower productivity and increased cost of doing business eroded the competitiveness of Nepali exports in the international market.

Imports, meanwhile, grew at a sharp pace amid growing consumption. As a result, the country’s trade deficit widened by more than 22 percent and touched Rs. 165.32 billion.

The country’s exports grew by a mere 2.4 percent and totalled Rs. 60.78 billion during Fiscal Year 2007/08. Imports shot up by over 16 percent and totalled Rs. 226.11 billion.

Statistics show that exports to India, the country’s largest trading partner, recorded a decline of 7.4 percent during the year. Exports to third countries grew by more than 25 percent, but given the small base of third country exports, the growth did not contribute much to bringing down the trade deficit.

“Nepal’s exports to India fell to Rs. 38.62 billion. Exports to other countries totalled Rs. 22.16 billion,” says the central bank report. Even in third country markets, Nepal’s leading industries such as woollen carpet, garment and pashmina continued to suffer from external and internal blows.

Imports from India increased by about 25 percent and from other countries by over 3 percent. According to the report, the country’s imports from India were valued at Rs. 144.52 billion. Imports from other countries amounted Rs. 81.59 billion.

With an export volume totalling Rs. 5.04 billion, woollen carpets became Nepal’s largest exportable commodity. Readymade garments dropped to second place, with exports amounting Rs. 4.74 billion. Zinc sheets rose in the ranks to take third place with Rs. 4.41 billion worth of exports.

As usual, petroleum products remained Nepal’s largest import, with purchases reaching Rs. 40.79 billion in the last fiscal year. Vehicles and spare parts, which totalled Rs. 11.87 billion, came next. MS billets were the third largest import with Rs. 8.14 billion.