Nepal’s trade deficit ballooned by 87.6 percent in the first five months of the fiscal year, as the import bill more than doubled and exports slowed to a crawl.

According to Nepal Rastra Bank, the country’s trade deficit jumped to Rs352 billion from Rs187.65 billion during the review period. The deficit is up 27 percent compared to the first five months of 2014-15. 

Last year, the trade deficit was smaller because an economic blockade by India lasting four and a half months strangled commerce.

Trade figures released by the central bank show imports on an upward trajectory in the first five months. The country’s imports swelled 78.9 percent to Rs382.64 billion, with imports from India more than doubling to Rs250.36 billion and imports from China surging 43 percent to Rs53.19 billion. 

On the other hand, the country’s export earnings rose nominally by 17.1 percent. Nepal earned a mere Rs30.63 billion in export revenue during the review period. 

Trade analyst Bijendra Man Shakya blamed bad policy for boosting exports as the main reason behind the poor export performance. Slowed growth in export earnings has widened the trade deficit, he said. 

“We have failed to increase exports of even a limited number of exportable goods like woolen carpet, garment and pashmina products,” Shakya said. “Also, the country has failed to explore and diversify export destinations.” India’s share in the country’s total imports has been increasing significantly in recent years. The southern neighbour’s share in total imports grew to 65.4 percent from 56.9 percent. 

Shares of China and third countries in the country’s imports have declined. Imports from China dropped to 13.9 percent from 17.4 percent and third country imports also fell to 20.7 percent from 25.7 percent. 

Shakya attributed the rise in imports from India to growing penetration of multinational companies in the Indian market. “Trade patterns have changed. Nepal is buying more products of multinational companies based in India,” he said. 

Shakya stressed the need to change the country’s trade policy. “We should think about benefitting from bilateral trade with India instead of just directing our exports towards third countries.” 

He urged the government and the private sector to lobby India for minimising non-tariff barriers. “Nepal can benefit from bilateral trade if uniform standard measures are enforced to address non-tariff barriers,” Shakya added.