Nepal’s Economy Shows Improved Performance: NRB Report
Kathmandu – Nepal’s economy is showing signs of steady recovery as it navigates complex challenges. According to the latest “Current Macroeconomic and Financial Situation” report published by the Nepal Rastra Bank, key economic indicators for the first four months of the fiscal year 2081/82 (mid-July to mid-November 2024) reflect progress toward financial stability and growth.
Foreign remittances remain a cornerstone of Nepal’s economy, recording a growth of 9.1% during the review period. The inflow reached NPR 521.63 billion, slightly lower than last year’s growth rate of 22.5%. In USD terms, remittances stood at $3.87 billion, up from $3.60 billion the previous year. The consistent rise in foreign remittances has bolstered household incomes and contributed to the economy’s overall liquidity.
Similarly, In terms of foreign employment, 147,478 Nepalese secured new labor permits during the period, while 94,105 renewed their permits. This marks a significant increase compared to the same period last year.
The country’s current account recorded a surplus of NPR 143.42 billion, a substantial improvement from NPR 97.10 billion during the same period last year. In USD terms, the surplus grew from $730.6 million to $1.06 billion. Similarly, the balance of payments (BOP) surplus increased to NPR 205.83 billion, up from NPR 150.24 billion.
Nepal’s total foreign exchange reserves reached NPR 2,255.35 billion reflecting a 10.5% increase. In USD terms, reserves rose to $16.70 billion, strengthening the country’s ability to withstand external economic shocks. The Nepal Rastra Bank’s reserves increased to NPR 2,008.15 billion, with 22% of the holdings in Indian currency, showcasing improved financial stability.
Notably, Private sector credit also experienced growth, with loans from banks and financial institutions rising by NPR 128.47 billion, or 2.5%. Deposits in banks grew by 2.3%, reaching NPR 149.84 billion during the review period.
Tourism income also increased by 2.8%, reaching NPR 26.84 billion, while tourism expenditure grew by 10.3%, totaling NPR 61.92 billion.
However, challenges remain, particularly with inflationary pressures. As of Kartik 2081 (mid-November), annual point-to-point consumer price inflation stood at 5.60%, up from 5.38% in the previous year. The food and beverage sector saw inflation rise by 9.10%, driven by sharp increases in the prices of vegetables (33.99%), pulses (10.78%), and edible oil (9.29%). On the other hand, prices for spices, sugar, and meat registered slight declines, providing some relief to consumers.
Amid these developments, the efforts by the government and financial institutions to stabilize key sectors, including agriculture, tourism, and construction, are expected to play a crucial role in sustaining economic momentum.