Kathmandu - In the fiscal year spanning from July 2022 to July 2023, Nepal faced economic challenges exacerbated by the global recession, leading to a daily trade deficit of 4.4 billion. Import trade decreased by 16 percent due to the impact of the recession, resulting in a reduction in the daily deficit as well. Customs department data showed that imports were valued at 19 trillion 20 billion 44 crores during 078/79, with a trade deficit of 17 trillion 20 billion 41 billion, leading to a daily loss of 4.77 billion. By the time of 079/80, imports amounted to 16 trillion 11 billion 73 crores, and the trade deficit decreased by 16.8 percent to 14 trillion 54 billion 59 billion, bringing the daily loss to 4.4 billion. Former Industry Secretary Chandra Prasad Ghimire noted that the year 2023 was considered the year of recession, and its effects were expected to persist for several months. However, some improvement was anticipated by 2024. The economic downturn had a significant impact on the cement industry, which struggled until March but showed signs of improvement thereafter. Ghimire explained that a decrease in consumption of non-essential items, such as clothing, cars, and houses, contributed to the decline in imports and losses. The government's ban on the import of luxury goods further influenced the trade deficit and currency reserves. Initially, 10 luxury items, including liquor, expensive mobile phones, and TVs, were prohibited to conserve foreign exchange reserves. However, the restrictions were lifted later in the year after a slight improvement in reserves.

The customs department data also revealed a decline in export volume by 21 percent. In 2078/79, exports amounted to 2 trillion 30 million, but in 079/80, it fell to 1 trillion 57 billion 14 million. According to former Commerce Joint Secretary, Ravi Sainju, the recession played a key role in reducing exports, affecting the consumer market and resulting in many business closures. The exports of palm and soybeans, which constituted 55 percent of total exports during 078/79, declined to 18.45 percent in 079/80. India's imposition of high taxes on imported palm oil and soybeans, combined with the reduction in Nepal's export volume, further exacerbated the situation. To address the trade deficit and boost the export market, the government introduced a national action plan that involved multiple agencies and initiatives, including promoting domestic production and identifying export potential in each province. However, despite efforts to control the economic downturn, Nepal's public debt increased by 2 trillion 8 billion rupees, reaching a total of 22 trillion 21 billion 67 billion rupees. This increase reflected the government's reliance on loans to meet budget deficits. Additionally, the National Bank's monetary policy for the fiscal year was expected to provide flexibility and support economic growth. However, some experts expressed concerns that the policy, though labeled "flexible," seemed tighter than the previous year, and it did not effectively address the economic challenges faced by the private sector. Some issues, such as high interest rates, low demand, cash flow problems, low production, job cuts, and declining private sector morale, remained unaddressed.

Nepal faced significant economic challenges during the fiscal year 2022-2023, influenced by the global recession and other factors. The impact of the recession was evident in decreased imports and exports, contributing to a daily trade deficit of 4.4 billion. The government's efforts to control imports through a ban on luxury goods also affected the trade balance. Additionally, the mounting public debt and issues with monetary policy implementation posed further obstacles to economic recovery. To overcome these challenges and achieve sustainable growth, concerted efforts from the government and private sector would be necessary, with a focus on boosting domestic production, promoting exports, and creating an environment conducive to investment and economic development.