Transcript Macroeconomic Performance an d International Trade

Macroeconomic Performance and International
Trade in the context of Nepal
presented by
Deependra B. Kshetry
at
The Efficiency Enhancement for the officials of The
Ministry of Commerce and Supplies held at Godavari
June 2011
Weak macro fundamentals
• Economic growth < 4 percent
• Inflation nearly two digits
• Current account deficit continues
• Balance of Payments deficit rising
• Foreign currency Reserve declining
Real Sector not vibrant
• Agricultural output declining (except current fiscal)
• Industrial activities affected by adverse investment
climate
• Service sector also felt pinched due to liquidity crunch
Factors responsible for weak performance
• Less attention of policy makers on economic issues
• Presentation and Implementation of budget not in
priority
• Political environment not conducive for economic
activities
• Lacking good governance in the bureaucracy
Nepal in world Arena
International Monetary fund – current account
convertibility
•
• WTO
• SAFTA
• BIMSTEC
Modalities of Trade
• Letter of Credit
• Cash Basis
- Tibet the autonomous Region of China
- India
• TIFA, USA
Trade Features
• Trade Preferred to Manufacturing
- Quick and Bulk Return
- Relatively less risk
• Inconsistent Policy due to political uncertainty a bounty
to trade
• Low manufacturing base, ground to expand trade
Trade Features – Contd….
• Export mainly unprocessed and items based on imported
raw materials eg. Cardamum, thread, zinc sheets,
woolen carpets etc.
•
No consistency in exported goods
Carpets, ready made garments, Pashmina etc.
• Almost entire import for consumption barring few raw
materials
Trade Features contd…
• Export to GDP ratio 5.2 percent
• Import to GDP ratio 32.0 percent
• Trade Deficit – a regular feature 37.19 percent of GDP
( India Rs. 174b)
•
Exceptions: Bangladesh 42.616b, Bhutan Rs. 1.42 b,
Canada Rs. 0.22b, Germany Rs. 0.70b
• Export to Import Ratio 16.1
Normative Outlook for Trade
• Reaping the benefits of fast growing giant neighbours
•
Identifying exportable items with backward linkages
• Branding of commodities (similar to Pashmina) and
quality control
• Processing of Agro – forestry Products
Normative.... Contd…
• Chalk out pragmatic commercial policy
• Promotional activities through foreign missions abroad.
• Acknowledgement and reward to contributors in practice
THANK YOU