Widening trade deficit could hurt growth: Experts

KATHMANDU, AUG 19:

Economic experts have expressed grave concern over the ever-increasing trade deficit that could affect the country’s growth.

“Imports are overtaking exports by more than 16 times because local manufacturing industries are not shifting towards service sectors as they are not confident regarding the security of their investment,” pointed out former finance minister Dr Ram Sharan Mahat during an interaction held on economic issues today.

“Political instability, lack of conducive environment, and absence of implementation of policies and programmes announced by the government are the reasons for our exports suffering,” he said, adding that political parties and the government have to concentrate on a common economic agenda if they want to see Nepal prosper.

Due to the high growth rate of imports compared to exports, total trade deficit surged by 23.9 per cent to Rs 479.82 billion, in the last fiscal year. Such deficit had expanded by 16.7 per cent in the previous year.

Chief economic adviser of the finance ministry Dr Chiranjibi Nepal also expressed that the growing trade deficit will only hurt the economy. “Until and unless we are able to promote exports there is little hope that trade deficit can be handled,” he said.

“The government is concerned about the issue, and we hope the timely budget announced this year will have a positive impact on the issue,” he assured. However, Dr Nepal said that the negligence of former governments and political parties regarding economic issues has led to the current situation.

“The current trade statistics are not unexpected and are a result of continued indifference towards economic issues,” pointed out economist Dr Chandramani Adhikary. “Concerned bodies are still not looking seriously into reducing the deficit which will bring a graver situation in the future,” he cautioned.

He pointed out that lack of coordination between political and economic policies have been affecting industrial sentiments, thus lowering exports and encouraging imports.

President of the Nepal Trade Association Shyam Prasad Bajagain also stressed on the need to improve exports immediately.

Source: THT