Economic indicators slump while prices sky rocket

The general public is facing difficulties in managing expenses as monetary efforts of the central bank have not been successful in pulling inflation to a single digit level since the beginning of the current fiscal year.

The rate of general price rise crossed 10.5 per cent in mid-October as compared to 8.9 per cent in the corresponding period of the previous year.

The index of food and beverages group increased by 9.1 per cent, whereas non-food and services group increased by 11.8 per cent during the review period. These indices had increased by 9.6 per cent and 8.2 per cent, respectively, in the corresponding period of the previous year.

However, workers' remittance has increased by 28.8 per cent, amounting to Rs 97.7 billion in the three months.

The economy, that was seemingly comfortable a few months back, appeared to be slowing down in the first quarter as fiscal expenditure remained insignificant due to the inefficient government.

In the first three months of the current fiscal year, the deposit growth rate has slowed down, inflation has grown, trade deficit has widened further causing balance of payments surplus to decline, while budget surplus has surged as government expenditure has shrunk because of prolonged uncertainty due to the adamant government.

In the three months, the government budget remained at a surplus of Rs 10.94 billion, according to the central bank.

Deposit mobilisation of financial institutions increased by 2.5 per cent, amounting to Rs 24.97 billion, which had grown by more than five per cent in the same period a year back. Though the liquidity situation has been at a comfortable level for the last one year, the persistent slow deposit growth rate has raised concerns regarding the repetition of another bout of liquidity crisis in the financial system.

On the other hand, increased credit to the private sector might signal increased economic activities. In the period, credit to the private sector increased by 5.8 per cent as compared to a growth of 1.4 per cent last year.

Trade deficit has widened as it surged by 40.8 per cent to Rs 115.75 billion as compared to an increase of 7.6 per cent during the same period of the previous year. Merchandise exports went up by 14.9 per cent to Rs 20.73 billion in the first three months of 2012-13, while merchandise imports have increased by 36.1 per cent to Rs 136.48 billion.

 

Macroeconomic indicator of three month

Inflation at 10.5 per cent

Foreign reserve at Rs 429.9 billion (-2.2 per cent)
Export at Rs 20.73 billion
Import at Rs 136.48 billion
Trade deficit at Rs 115.75 billion (+40.8%)

Deposit at Rs 1,087 billion (+2.05 per cent)

Credit at Rs 836.7 billion (+5.8 per cent)

Balance of payments at Rs 347.3 million

Remittance at Rs 97.7 billion (+28.8 per cent)
Revenue mobilisation at Rs 57.45 billion

Budget surplus at Rs 10.94 billion (+343.2 per cent)

(Source: Nepal Rastra Bank)