Nepal Trade Balance Crisis: Latest Economic Signals
Nepal's trade balance crisis continues in fiscal year 2025/26. The eight-month data (mid-July 2025 to mid-March 2026) from the Nepal Rastra Bank shows a trade deficit of Rs. 1,098,138.20 million — a structural vulnerability that persists despite recent export improvements.
The Scale of Nepal's Trade Imbalance
- For every Rs. 100 Nepal imports, it exports only Rs. 14.82
- Nepal imports roughly 6.7 times more than it exports
- Export coverage (14.82%) has improved marginally from 13.81% the prior year
Three-Year Trade Deficit Trend
| Period | Exports (Rs. M) | Imports (Rs. M) | Deficit (Rs. M) | Export/Import % |
|---|---|---|---|---|
| 8M 2023/24 | 100,617.44 | 1,030,222.70 | 929,605.26 | 9.77% |
| 8M 2024/25 | 158,172.40 | 1,145,566.24 | 987,393.84 | 13.81% |
| 8M 2025/26 | 191,112.03 | 1,289,250.23 | 1,098,138.20 | 14.82% |
Country-Wise Trade Deficit
India: Rs. 567,396.74M (51.67% of total deficit, +0.66%)
India dominates Nepal's trade deficit. Nepal's exports to India cover only 21.64% of its imports from India. The India deficit is growing slowly (+0.66%), a sign of some stabilization.
China: Rs. 264,683.68M (24.10% of deficit, +21.94%)
China's share of Nepal's trade deficit is rising sharply. Imports from China surged +21.21% while Nepal's exports to China collapsed -53.65% to just Rs. 983.35M. Nepal exports Rs. 0.37 for every Rs. 100 it imports from China — the most lopsided bilateral relationship.
Other Countries: Rs. 266,057.78M (24.23% of deficit, +28.75%)
The fastest-growing deficit segment, reflecting rising imports from Southeast Asia, the Middle East, and Europe.
Structural Root Causes
- Petroleum dependency: Rs. 185,208.81M in imports (14.37% of total) with zero domestic production
- Narrow export base: A single commodity (soyabean oil) accounts for 39.65% of exports
- Low manufacturing: Nepal lacks industrial infrastructure for high-value exports
- Remittance-fueled consumption: Inflows boost import demand without building export capacity
- Landlocked geography: High transport costs reduce export competitiveness
Positive Signals
- Electricity exports: Rs. 19,555.00M (+49.46% from Rs. 13,083.90M) — hydropower emerging as a strategic export
- Cardamom: +62.68% — high-value agricultural niche growing well
- Palm Oil exports: +198.87% — new export category
- Export growth (+20.83%) outpacing import growth (+12.54%) for a second consecutive year
Conclusion
Nepal's trade balance crisis is deep-rooted and will not be resolved quickly. However, the improving trend in export growth, rising electricity exports, and stronger agricultural commodity performance are early signals that the trajectory could improve over the medium term with the right industrial and energy export policies.