#NepalEconomy #TradeDeficit #B
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By Sandeep Chaudhary

Trade Deficit Narrows Slightly but Still High at USD −883M in Nepal’s BoP Data

Trade Deficit Narrows Slightly but Still High at USD −883M in Nepal’s BoP Data

Nepal’s merchandise trade deficit narrowed marginally to USD −883 million in the first month of FY 2025/26, compared to USD −914 million a year earlier. The Balance of Payments (BoP) figures published by Nepal Rastra Bank indicate that while imports moderated slightly, exports remained low, keeping the trade gap significantly high.

Goods imports stood at USD 987 million, while exports were only USD 200 million, leaving Nepal heavily reliant on foreign goods to meet domestic demand. Oil and petroleum products accounted for a sizable portion of imports, with the fuel trade deficit alone at USD −124 million.

Despite this slight improvement, analysts warn that the trade deficit continues to weigh on Nepal’s external sector, offsetting gains from remittance inflows and services earnings. The services deficit stood at USD −96 million, showing a small narrowing compared to previous years, but not enough to counterbalance the massive goods imbalance.

Experts highlight that Nepal must prioritize export diversification, industrial productivity, and import substitution to reduce the trade deficit sustainably. Without structural changes, the dependence on remittances and reserves will continue to mask the underlying vulnerabilities.

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