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Sat, March 2, 2024

Half-yearly economic review depicts positive economic trend; remittance inflows, forex reserves rise

B360
B360 February 6, 2024, 5:44 pm
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KATHMANDU: The half-yearly review of the fiscal year 2023/24 indicates positive trends in various economic and financial indicators.

According to the assessment by the Nepal Rastra Bank (NRB), based on the data for the six months ending in mid-January, there has been an improvement in overall economic and financial indicators. 

Remittance inflows rose by 25.3% to reach Rs 733.22 billion in the review period, compared to a 24.3% increase in the same period last year. In US Dollar terms, remittance inflows increased by 22.6% to 5.52 billion, compared to an increase of 13.9% in the same period of the previous year.

During the review period, the number of Nepali workers, both institutional and individual, obtaining first-time approval for foreign employment was 207,970, and those obtaining approval for renewed entry was 135,435. In the previous year, these numbers were 275,643 and 142,548 respectively.

Net transfer rose 24% to Rs 799.51 billion in the review period. Such a transfer had increased 22.7% in the same period of the previous year.

The Balance of Payments (BOP) remained at a surplus of Rs 273.52 billion in the review period, compared to a surplus of Rs 92.15 billion in the same period of the previous year. In US Dollar terms, the BOP remained at a surplus of 2.06 billion in the review period, compared to a surplus of 697.4 million in the same period of the previous year.

Gross foreign exchange reserves rose by 18.0% to Rs 1816.57 billion in mid-January 2024, up from Rs 1539.36 billion in mid-July 2023. In US Dollar terms, the gross foreign exchange reserves increased by 16.9% to reach 13.69 billion in mid-January 2024, up from 11.71 billion in mid-July 2023.

Similarly, broad money (M2) rose by 6.4%, while on a year-on-year basis, M2 expanded by 14.3%. 

Deposits at banks and financial institutions increased by 6.6%, and private sector credit rose by 4%. On a year-on-year basis, deposits increased by 14.9% and private sector credit rose by 4.9%. The year-on-year consumer price inflation moderated to 5.26% in mid-January 2024, compared to 7.26% a year ago. Inflation in the food and beverage category stood at 5.77%, whereas non-food and service category inflation stood at 4.85% in the review month.

As the report states, the year-on-year price index of ghee and oil, vegetables, meat & fish, and transportation sub-categories showed a downward trend in mid-January 2024. Additionally, the price index of spices and sugar and sugar products is also moderating. During the review month, the year-on-year import price index, salary and wage rate index, and the wholesale price index also moderated. These factors contributed to moderated consumer price inflation.

Under the Food and Beverage Category, the year-on-year price index of ghee and oil, vegetable, and meat and fish sub-category decreased by 13.07%, 1.04%, and 0.06% respectively in the review month. The year-on-year price index of the spices sub-category increased by 35.60%, cereal grains and their products by 11.38%, pulses and legumes by 11.14%, milk products and eggs by 10.29%, and fruit by 10.15%.

Under the Non-Food and Services Category, the year-on-year price index of the transportation sub-category decreased by 1.62% in the review month. The year-on-year price index of the recreation and culture sub-category increased by 12.84%, miscellaneous goods and services by 9.73%, education by 8.92%, furnishing and household equipment by 5.18%, and clothes and footwear by 4.96%.

The year-on-year consumer price inflation in the Kathmandu Valley, Terai, Hill, and Mountain region stood at 5.76%, 4.78%, 5.40%, and 6.57% respectively in the review month. Such inflation in these regions was 6.93%, 7.49%, 7.30%, and 6.69% respectively a year ago.

The year-on-year wholesale price inflation was at 3.36% in mid-January 2024, compared to 9.82% a year ago. The year-on-year wholesale price index of consumption goods, intermediate goods, and capital goods increased by 6.16%, 1.99%, and 2.71% respectively. The year-on-year wholesale price index of construction material decreased by 1.08% in the review month.

The year-on-year salary and wage rate index increased by 5.56% in mid-January 2024, compared to 10.27% a year ago. The year-on-year Salary index and Wage rate index increased by 1.05% and 6.92% respectively in the review month.

Imports fell by 3.1%, exports by 7.2%, and the trade deficit narrowed by 2.6%. 

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