Imports surges 31.6% to NRs 401.52 billion as trade deficit widens

Nepal’s merchandise imports increased 31.6% to NRs 401.52 billion during the first two months of fiscal year 2026/27, widening the country’s trade deficit to NRs 324.93 billion despite strong growth in exports and remittance inflows, according to Nepal Rastra Bank (NRB).

The central bank’s latest Current Macroeconomic and Financial Situation of Nepal report shows that merchandise exports rose 61.9% year-on-year to NRs 76.59 billion during the review period. However, the growth in exports was insufficient to offset the substantially larger import bill.

Exports to India increased 70.6%, while shipments to China surged 137.6%. Exports to other destinations rose 22.7%. Higher shipments of soybean oil, polyester yarn and thread, palm oil, zinc sheets and particle board contributed to the overall expansion.

On the import side, purchases from India increased 27.4%, while imports from China rose 17.2%. Imports from other countries expanded 56.6%. Increased imports of petroleum products, chemical fertilisers, crude soybean oil, edible oils, vehicles and transport equipment contributed to the overall rise.

As imports continued to exceed exports by a wide margin, the trade deficit widened 26% to NRs 324.93 billion. The export-import ratio improved to 19.1%, compared with 15.5% a year earlier, but export earnings remained substantially below expenditure on imported goods.

Remittance inflows provided significant support to Nepal’s external financial position, rising 23.9% to NRs 436.36 billion during the first two months of the fiscal year. In US dollar terms, remittances increased 13.5% to $2.85 billion.

The country’s current account surplus expanded to NRs 169.04 billion, up from NRs 130.97 billion in the corresponding period last year. The balance of payments surplus also increased to NRs 187.68 billion from NRs 153.68 billion.

Foreign exchange reserves rose 4.3% from mid-July to NRs 4.06 trillion by mid-September 2026. In US dollar terms, reserves increased 4.6% to $26.48 billion, providing coverage for 20.9 months of merchandise imports and 17.8 months of merchandise and services imports.

Meanwhile, foreign direct investment inflows through equity, excluding reinvested earnings, increased to NRs 2.98 billion from NRs 1.27 billion a year earlier, although the overall amount remained relatively small.