Nepal’s Trade Deficit Widens Despite Sharp Export Growth in First Quarter of FY 2082/83

Nepal’s trade deficit has expanded by 12.18 percent in the first three months of the current fiscal year 2082/83, even though exports surged dramatically by 89.64 percent, according to the latest report from the Department of Customs.

From mid-July to mid-October 2025, Nepal imported goods and services worth Rs. 468.08 billion, while exporting Rs. 72.78 billion worth of goods and services. Compared to the same period last fiscal year, imports increased by 19.79 percent and exports by a striking 89.64 percent.

During the corresponding three months of FY 2081/82, Nepal’s imports had totaled Rs. 390.75 billion, and exports stood at Rs. 38.37 billion. Consequently, the trade deficit at that time was Rs. 352.37 billion. In the current fiscal year, the deficit widened to Rs. 395.30 billion, reflecting the persistent imbalance between imports and exports.

Overall, the country’s foreign trade volume increased by 26.04 percent, indicating a higher level of external economic activity but also showing that the import surge outweighed export growth.

A key factor behind the remarkable export growth is the sharp rise in soybean oil exports, which accounted for 42.17 percent of Nepal’s total exports in the first quarter.

Out of the total Rs. 72.78 billion worth of exports, Rs. 30.69 billion came from soybean oil alone. This marks a major shift compared to last fiscal year, when soybean oil made up only 2.46 percent of total exports — about Rs. 945 million out of Rs. 38.37 billion.

The surge in soybean oil exports has helped boost Nepal’s export figures on paper, but it also underscores a narrow export base concentrated on a few commodities, leaving the trade sector vulnerable to price and policy fluctuations in importing countries, particularly India.

The figures reveal a paradox in Nepal’s external trade: while exports have increased substantially, the trade deficit continues to widen because of even faster growth in imports.

This pattern suggests that Nepal’s import dependency remains high, driven by demand for petroleum products, vehicles, industrial raw materials, and electronics. Meanwhile, export growth remains unsustainable and commodity-specific, relying heavily on re-exportable products such as processed oils rather than diversified value-added goods.

Economists warn that without a shift toward manufacturing-based exports and import substitution, the trade imbalance will persist, exerting pressure on foreign reserves and the exchange rate.

• Trade deficit: Rs. 395.30 billion (↑12.18%)

• Total trade volume: Rs. 540.86 billion (↑26.04%)

• Exports: Rs. 72.78 billion (↑89.64%)

• Imports: Rs. 468.08 billion (↑19.79%)

• Soybean oil exports: Rs. 30.69 billion (42.17% of total exports)

In essence, Nepal’s strong export growth — powered mainly by soybean oil — masks an underlying structural weakness in its trade economy. The widening deficit despite record exports reflects deep-rooted reliance on imports and limited diversification of export products.