Services exports jump 20.6pc on tourism hike

May 18, 2017

The Kathmandu Post, 18th May 2017, Kathmandu

Nepal’s services exports jumped 20.6 percent in the first nine months of the current fiscal year driven by a hike in the number of tourists visiting the country.

Nepal exported services worth Rs119.9 billion in the first nine months of 2016-17 compared to Rs99.4 billion recorded in the same period a year ago, according to the latest Macroeconomic Report of Nepal Rastra Bank, the central bank.

This growth was triggered by a healthy uptick in earnings from the travel sector, which accounts for almost 37 percent of the country’s services exports.

“Nepal’s tourism sector recovered in the current fiscal year after being hit by earthquakes and supply disruption [in 2015 and 2016] to post a surplus,” Nara Bahadur Thapa, head of the Research Department at the NRB, said. xThe travel sector generated Rs44.1 billion in the nine-month period, up 45.3 percent than in the same period a year ago, as more foreigners visited Nepal for purposes such as sightseeing, trekking and mountaineering. This gain made by the travel sector, however, was offset by Nepalis travelling abroad, who spent Rs59.3 billion in the first nine months of 2016-17. Nepalis studying abroad also spent Rs25 billion abroad in the same period. Despite this, net income from services sector stood at Rs6.4 billion in the nine-month period.

While the performance of the services sector remained satisfactory, merchandise trade registered a deficit of a whopping Rs671.2 billion in the first nine months of the current fiscal year largely because of surge in imports.

Nepal’s imports soared by 39.7 percent to Rs726.4 billion in the nine-month period due to higher demand for petroleum products, vehicles and spare parts, MS billet, and machinery and parts, says the NRB report. On the other hand, exports increased by a modest 12.1pc to Rs55.2 billion during the period.

This imbalance in imports and exports, and moderate hike in remittance income-up 6 pc to Rs511.9 billion-pushed current account into the deficit of Rs10.3 billion in the first nine months of 2016-17. A current account deficit, however, did not drag balance of payments (BoP) into the negative territory as well. The country’s BoP stood at a surplus of Rs50.6 billion in the nine-month period. This indicates inflow of money into the economy from overseas surpassed outflows by Rs50.6 billion. 

The BoP posted a surplus partly because of a strong growth in inflow of foreign investment. Foreign direct investment surged 164pc to Rs11.1 billion in the first nine months of the current fiscal year. A positive BoP also helped the country’s foreign exchange reserve to expand by 5.3 pc to $10.3 billion. Based on imports of first nine months of the current fiscal year, the foreign exchange holdings is sufficient to cover merchandise imports for 13.3 months, and merchandise and services imports for 11.5 months, says the NRB report.


Key indicators

Service exports        Rs119.9b

Service imports        Rs113.5b

Goods exports        Rs55.2b

Goods imports        Rs726.4b

Current account deficit    Rs10.3b

Balance of payments surplus    Rs50.6b

Foreign exchange reserve    $10.3b