Nepal’s Export Growth Nearly Doubles in 2082/83 – Key Drivers Explained

Nepal’s external sector has shown a remarkable turnaround in early FY 2082/83, with exports nearly doubling year-on-year. According to the latest data, exports rose by 95.7% in mid-August 2082/83, compared to a contraction of -9.6% in the same period of the previous year. On an annual basis, exports in FY 2024/25 had already surged by 81.8%, reversing the declining trend seen in FY 2022/23 and FY 2023/24. This recovery signals not only the resilience of Nepal’s export sector but also the changing dynamics of global demand and domestic supply capacity.

Several key drivers explain this sharp rebound. First, improved foreign demand for traditional exports like carpets, garments, pashmina, tea, and handicrafts has boosted volumes, especially in European markets such as Germany where Nepal enjoys a trade surplus. Second, hydropower exports to India have begun to add significantly to the export basket, diversifying away from overdependence on low-value-added goods. Third, the stabilization of the domestic currency and robust foreign reserves have provided businesses with greater confidence to scale up production and trade.

Another driver has been the improvement in trade logistics and border management. Streamlined customs processes and infrastructure upgrades at key trade points, including Kakarbhitta and Birgunj, have reduced bottlenecks, allowing exporters to move goods more efficiently. Additionally, policy support in the form of export incentives and government efforts to promote niche products like herbal and agro-exports have contributed to the growth momentum.

However, risks remain. The import bill continues to grow moderately (11.4% by mid-August 2082/83), and Nepal’s export base is still narrow. Heavy reliance on remittances to sustain external balances means that the export sector must keep expanding to ensure long-term sustainability. Furthermore, unless investment in manufacturing and industrial diversification picks up, export growth could remain volatile.

Nevertheless, the near doubling of exports in 2082/83 is a major positive development. It strengthens the current account surplus (Rs. 78.1 billion in mid-August 2082/83), builds foreign reserves, and provides much-needed confidence for Nepal’s growth outlook. If sustained, this trend could help reduce the structural trade deficit and move Nepal closer to a more balanced external sector.