KATHMANDU, Sept 19: The Gen Z protests left behind human casualties and damage worth billions of rupees to public and private property, jolting the domestic economy. Yet, even as internal indicators point to stress, Nepal Rastra Bank’s (NRB) latest report suggests that external economic indicators are providing a glimmer of hope.
According to the central bank’s review of the country’s economic and financial situation released on Monday, foreign exchange reserves remain adequate, the current account surplus has widened, the capital account is in positive territory, and remittances have surged. Exports have nearly doubled, while inflation has eased to its lowest level in recent years.
Remittance inflows jumped by 29.9 percent in the first month of the fiscal year, reaching Rs 177.41 billion compared to Rs 136.60 billion in the same period last year. The rise was supported by an increase in labor migration approvals—44,466 Nepalis received final approvals for foreign employment, while 23,644 renewed their permits.
Foreign exchange reserves stood at Rs 2.806 trillion by mid-August, up 4.8 percent from Rs 2.677 trillion in mid-July. Based on current import trends, reserves are sufficient to cover 20.4 months of goods imports and 16.6 months of goods and services imports. The current account surplus rose sharply to Rs 78.14 billion, up from Rs 33.08 billion in the same period last year. The capital account also remained in surplus at Rs 89.3 billion, more than double last year’s figure of Rs 40.9 billion.
Exports increased by 95.7 percent in the first month of the fiscal year, totaling Rs 23.93 billion. This marks a dramatic turnaround from the 9.6 percent decline recorded during the same period last year. Exports to India surged by 156.7 percent, led by strong demand for soybean oil, palm oil, polyester thread, cardamom, and jute goods. Imports, meanwhile, rose by 11.4 percent to Rs 143.04 billion.
Nepal's robust external sector performance outshines sluggish i...
Annual consumer price inflation slowed to 1.68 percent in mid-August, compared to 4.09 percent a year ago. Food and beverage inflation stood at 2.28 percent, while non-food and services inflation was 3.95 percent. Regionally, inflation was 2.26 percent in the Kathmandu Valley, 1.33 percent in the Terai, 1.56 percent in the Hills, and 2.59 percent in the Mountains.
Despite a net service income deficit of Rs 13.39 billion—slightly improved from last year’s Rs 15.06 billion—tourism income increased by 12.7 percent, reaching Rs 5.38 billion. Education-related expenditures abroad fell to Rs 14.31 billion, down from Rs 22.32 billion in the same period last year.
Remittances, robust export growth, sufficient reserves, and easing inflation suggest that Nepal’s external sector remains stable, offering cautious optimism for the economy despite the shocks from the Gen Z protests.
Key highlights:
Remittance inflows rose by 30 percent
Export trade increased by 96 percent
Foreign exchange reserves sufficient to cover 20.4 months of goods imports
Current account surplus of Rs 78.14 billion
Capital account surplus of Rs 89.3 billion
Consumer price inflation only 1.68 percent
