Trade deficit widens 16.6 pc to over Rs 1,781bn in FY 2025/26: NRB report

KATHMANDU: Nepal's total trade deficit expanded by 16.6% to reach Rs 1,781.09 billion in Fiscal Year 2025/26, up from a 6% growth recorded in the previous fiscal year, according to annual macroeconomic data released by Nepal Rastra Bank on Thursday. The export-import ratio consequently fell to 15% in the review year from 15.4% in the previous year.

During FY 2025/26, merchandise exports grew by 13.8% to Rs 315.29 billion, compared to an 81.8% growth in the preceding year. By destination, exports to India and other countries expanded by 15.1% and 10.1% respectively, while exports to China declined by 28%. The year saw increased exports of soybean oil, palm oil, cardamom, jute goods and noodles, whereas exports of zinc sheet, particleboard, tea, woollen carpet and handicraft goods decreased.

Merchandise imports expanded by 16.2% to total Rs 2096.38 billion in FY 2025/26, compared to a growth of 13.3% a year ago. Imports from India, China and other countries rose by 13%, 24.7% and 17.5% respectively. Major import increases were recorded in petroleum products, silver, transport equipment, vehicle and spare parts, chemical fertiliser and other machinery and parts. Conversely, imports of edible oil, hot rolled sheet in coil, garlic, bitumen and MS billet declined during the year. Merchandise imports from India against payment in convertible foreign currency amounted to Rs 197.25 billion, up from Rs 181.15 billion in the previous year.

Based on Broad Economic Categories, final consumption goods made up 69% of total exports in the review year, followed by intermediate goods at 30.4% and capital goods at 0.6%. In the previous year, these categories represented 67.7%, 31.4% and 0.9% of total exports respectively. On the import side, intermediate goods held the largest share at 51.4%, followed by final consumption goods at 39% and capital goods at 9.6%, compared to 51.7%, 39.1% and 9.2% respectively in the previous fiscal year.

In the 12th month of FY 2025/26, customs-based data showed that the year-on-year unit value export price index increased by 6.5%, while the import price index rose by 15.1%. As a result, the terms of trade index recorded a decrease of 7.5% during the review month.