Nepal Economic Updates: How did the economy do in the first two months of the current fiscal 2023/24?

1. Inflation (CPI-based inflation at 8.19% year-on-year): Inflation refers to the rise in prices of goods and services over time. The Consumer Price Index (CPI) measures how much the average price of certain goods and services has changed. The current rate means things are about 8.19% more expensive now than they were a year ago.

2. Trade Dynamics:

• Imports (goods and services bought from other countries) dropped by 5.1%.
• Exports (goods and services sold to other countries) saw a larger decline of 7.8%.
• The trade deficit (when a country spends more on imports than it earns from exports) reduced by 4.7%. This implies that Nepal is slowly balancing its trade, either by purchasing less or selling more.

3. Rise in Remittances: Remittances, the funds sent home by Nepali workers abroad, saw a significant increase. They grew by 22.1% in Nepalese Rupee terms and by 17.7% when converted to US Dollars. This suggests more money is being pumped into the country by its overseas workforce.

4. Balance of Payments: Nepal has a balance of payments surplus of Rs.53.61 billion, which means more money is entering the country than leaving it. This is often a positive indicator of a nation's economic health.

5. Foreign Exchange Reserves: These reserves act like a savings account for countries. Nepal's savings in foreign currencies are quite robust, standing at NPR 1598.90 billion and 12.01 billion in USD terms. This helps Nepal manage the value of its own currency and comfortably pay for its imports.

6. Nepal Government's Finances: The government's spending (expenditure) amounted to Rs.131.14 billion, while what it earned (revenue, primarily from taxes) stood higher at Rs.141.08 billion, suggesting a surplus in government finances.

7. Monetary Insights:

• Broad money (M2), a view of how much "money" is available in the system, has decreased by 0.5% recently but has increased 12.0% over the past year.
• Deposits, the money people and businesses keep in banks and financial institutions (BFIs), decreased slightly by 0.1%, but saw a 13.2% growth over the year.
• Private sector credit, the amount businesses and individuals have borrowed, saw a slight uptick by 0.7%. Annually, it's increased by 4.0%, indicating more borrowing and potentially more investment.