Remittances soar 74 percent, exports rebound: NRB

Nepal has witnessed a strong growth in remittance inflow and exports -- two critical sectors of the economy -- in the first two months of the current fiscal year, says a report of Nepal Rastra Bank (NRB).During the period, the country received Rs. 31.88 billion in remittances from Nepalis working abroad. The figure is a whopping 74 percent rise over the receipts for the same period last year. The gain has been attributed to an increase in the number of Nepalis leaving for overseas jobs and also to depreciation of the Nepali rupee vis-à-vis the US dollar. During the two months, the number of Nepali foreign workers grew by 17.75 percent and the Nepali currency lost value by 6.48 percent.

Likewise, the country's total exports bounced back by more than one-third and touched Rs. 13.46 billion in the first two months of 2008/09, compared to a decline of 3 percent in the same period last year. Of the total exports, sales to India -- Nepal's largest market - went up by over 12 percent to reach Rs. 7.28 billion. Exports to other countries also soared by 82 percent and amounted to Rs. 6.17 billion. The NRB report released on Friday has credited the rise to an upsurge in exports of readymade garments, copper wire, tooth paste and zinc sheets to India and increased sales of Nepali pulses, woollen carpets, herbs and pashmina in other countries. Propelled by strong consumption on the back of greater remittances, Nepal's total imports also rose by 43.3 percent during the period and touched Rs. 48.22 billion. "Imports from India grew by over 34 percent to Rs. 26.85 billion and from other countries by 56.5 percent to Rs. 21.37 billion," says the report. With imports growing faster than exports, the country's trade deficit swelled by over 46 percent to reach Rs. 34.76 billion.

The report portrays a gloomy picture for consumers, as consumer inflation rose to 13.5 percent in mid-September 2008 compared to mid-September 2007. Prices of food items and beverages increased by 14.2 percent while non-food items and services went up by 12.8 percent during the period. "A sharp rise in prices were recorded in the case of sugar, oil, ghee, grains, rice, pulses, restaurant meals, milk and milk products, meat, fish and eggs and spices," says the report. The cost of transportation and communication and housing goods and services rose by 23.1 percent and 18.1 percent respectively in mid-September 2008 compared to a year ago.