Economic Situation of Nepal in the First Month of Fiscal Year 81/82

The Nepal Rastra Bank’s report for the first month of fiscal year 81/82 highlights a mixed economic performance. Inflation in Shrawan 2081 was 4.10%, significantly lower than the 7.52% recorded in the same month last year. This reduction is primarily due to controlled prices in the non-food sectors, despite the rise in food and beverage costs.

Exports, however, showed a sharp decline, falling by 9.6% to Rs. 12.23 billion. Exports to India, China, and other countries dropped, with China showing the steepest fall of 59.8%. Notably, there were increases in the export of goods such as particle board, tea, and woolen carpets, but significant decreases in exports of cardamom and palm oil.

On the import front, there was a slight reduction of 0.6%, with the total value reaching Rs. 128.38 billion. Imports from India fell, but imports from China and other nations rose, especially for goods like chemical fertilizers and vehicles.

A key highlight is the remittance inflow, which grew by 18%, contributing Rs. 136.93 billion to the economy. Foreign employment continued to be a major source of income, with 36,928 new labor permits issued.

The current account and balance of payments (BOP) remained in surplus, with Rs. 30.89 billion and Rs. 40.90 billion respectively. Foreign exchange reserves remained robust, capable of covering 16.7 months of goods imports.

Impact on the Stock Market

The economic indicators from the first month of fiscal year 81/82 provide a stable outlook for Nepal’s stock market. The controlled inflation and positive remittance inflows offer a conducive environment for investment, as higher liquidity tends to flow into the stock market. Additionally, the improvement in the current account and foreign exchange reserves signals stability, which is likely to boost investor confidence in the Nepal Stock Exchange (NEPSE). However, the drop in exports could indicate challenges for industries reliant on international markets, which may reflect in stock prices of export-driven companies.