Summary of Global Macroeconomic Situation

Other Macroeconomic Indicators

Current Global Macroeconomic Situation

1. In the United States, the consumer price index rose by 9.1 percent in June, compared with a year earlier, and it also rose by 9.1 percent in the United Kingdom in May—the highest inflation rates in these two countries in 40 years. In the euro area, inflation in June reached 8.6 percent, its highest level since the inception of the monetary union. Equally concerning, in emerging market and developing economies, second-quarter inflation is estimated to have been 9.8 percent.

2. Wage growth has on average not kept up with inflation across both advanced and emerging market and developing economies, eroding household purchasing power.

3. Central banks in several emerging market and developing economies have raised interest rates more aggressively than during past advanced economy tightening cycles. The associated rise in longer-term borrowing costs, including mortgage rates, and tighter global financial conditions have led to precipitous declines in equity prices, weighing on growth

 4. China’s economic slowdown has added to global supply chain disruptions. Shanghai, a major global supply chain hub, entered a strict lockdown in April 2022, forcing citywide economic activity to halt for about eight weeks. In the second quarter, real GDP contracted significantly by 2.6 percent on a sequential basis, driven by lower consumption—the sharpes decline since the first quarter of 2020, at the onset of the pandemic, when it declined by 10.3 percent. Since then, more contagious variants have driven a worrisome surge in COVID-19 cases.

5. The war in Ukraine continues, causing widespread hardship. The war’s humanitarian cost is rising, with 9 million people having fled Ukraine since the Russian invasion started and continuing loss of life and destruction of physical capital. Russia’s economy is estimated to have contracted during the second quarter by less than previously projected, with crude oil and nonenergy exports holding up better than expected

6. The food crisis worsens. Global food prices have stabilized in recent months but remain much higher than in 2021. The principal driver of global food price inflation—particularly prices of cereal, such as wheat––has been the war in Ukraine; export restrictions in several countries have compounded global food price increases, although a few of these restrictions have recently lapsed. Low-income countries, where food represents a larger share of consumption, are feeling the impact of this inflation most keenly.

Summary of Annual Macroeconomic Situation F/Y 2021/22

This macroeconomic report is prepared based on annual data of FY 2021/22 published by NRB. The key macro-economic indicators and variables are highlighted in the table below and explained in further section:

A. NEPSE and Ratio of Market Cap to GDP

The NEPSE index at Mid-July 2022 decline by 30.31% to close at 2,009.47 points, compared to 2,883.41 points in the same period of last year. The Market capitalization of NEPSE as well decreased from NPR 4,010.96 billion in Mid-July 2021 to NPR 2,869.34 billion in Mid-July 2022.

On the other hand, the ratio of market capitalization of NEPSE to GDP at Mid-July 2022 has decreased to 59.14% compared to 93.77% in the last year during the same review period.

B. GDP Growth

The GDP growth rate for the F/Y 2021/22 was 5.80 % which was 4.01% for the F/Y 2020/21. The increasing growth rate indicates that the country is slowly reviving from the damage caused by COVID 19. In the past 10 years, highest GDP growth rate was 8.98% for the F.Y 2016/17, whereas lowest GDP growth rate was -2.09% for the F/Y 2019/20.


To evaluate the current scenario of interest rate in the economy, interbank rate and base rate of commercial banks are taken into consideration.

Interbank Rate

The interbank rate of commercial banks had decreased to 0.02% in Mid-Aug,2020 which has been gradually increasing since then and has reached to 6.99% in Mid-July 2022 indicating tightening of liquidity in the banking system. The interbank rate during the same period a year ago stood at 4.12%.

Base Rate

The base rate of commercial banks stands at 9.54% in Mid-July 2022 compared to 6.86% a year ago. This has set the weighted average lending rate at 11.62%. On the other hand, the weighted average deposit rate stands at 7.41%. Such rates were 8.43% and 4.65% respectively in the corresponding month of the previous year.


The consumer price inflation which was 4.19 percent a year ago which has increased to 8.08 pecent in Mid-July 2022. The average annual inflation remained at 6.32 percent in F/Y 2021/22 compared to 3.60 percent a year ago.

Under food and beverage category, the prices products and alchoholic drinks sub-categories rose by 26.13 percent, 9.92 percent, 9.84 percent and 8.57 percent respectively on annual basis. The annual average food and beverage inflation stood at 5.69 percent in 2021/22 compared to 5.00 percent a year ago. The y-o-y food and beverage inflation stood at 6.89 percent in mid-July 2022 compared to 5.81 percent a year ago.


Deposit Growth: The deposits of BFI’s as at Mid-July 2022 increased by 8.80% to NPR 5,158.13 billion, compared to NPR 4,740.90 billion in Mid-July 2021. The share of demand, saving, and fixed deposits in total deposits stands at 8.9 percent, 27.6 percent and 55.8 percent respectively in mid-July 2022. Such shares were 10.4 percent, 34.2 percent and 47 percent respectively a year ago. The share of institutional deposits in total deposit of BFIs stands at 38.3 percent in mid-July 2022. Such a share was 42.7 percent in mid-July 2021.

Credit Growth: The credit disbursement of BFI’s as at Mid-July 2022 increased to NPR. 4,709.13 billion by 12.85%, compared to NPR 4,172.78 billion in Mid-July 2021. The growth during the same period last year was 27.3%. Outstanding loan of BFIs to the agriculture sector increased 19.7 percent, industrial production sector 8 percent, transportation, communication and public sector 15.7 percent, wholesale and retail sector 13.3 percent and service industry sector 8.7 percent in the review year.

In the review year, term loan extended by BFIs increased 28.4 percent, overdraft 13.3 percent, demand and working capital loan 15.2 percent, and real estate loan (including residential personal home loan) 17.5 percent percent. However, trust receipt (import) loan decreased 61.9 percent, margin nature loan 24.3 and hire purchase loan 2.2 percent in the review year.


Summary of Monetary Operation during FY 2021/22

In the review period, NRB mopped up Rs.60 billion liquidity of which Rs.28.35 billion was through reverse repo auction and Rs.31.65 billion through deposit collection auction.

In the previous year, NRB mopped Rs.303.29 billion liquidity of which Rs.109.54 billion was through reverse repo and Rs. 193.75 billion through deposit collection auction. In the review year, NRB injected Rs 9702.41 billion liquidity of which Rs. 476.39 billion was through repo, Rs.55.92 billion through outright purchase and Rs.9170.11 billion through standing liquidity facility. The NRB purchased Indian currency (INR) equivalent to Rs. 595.23 billion through the sale of USD 4.92 billion in the review period. INR equivalent to Rs.535.23 billion was purchased through the sale of USD 4.54 billion in the corresponding period of previous year.


Fiscal Deficit/Surplus

In the annual daya of 2021/22, total revenue collected by the government till Mid-July 2022 is Rs.1067.95 billion which is 14.11% higher compared with the corresponding year of the previous fiscal year. The total expenditure of the government till Mid-July 2022 is Rs.1,296.24 billion which is 8.32% higher than that of the expenditure on the corresponding year of previous fiscal year.


The country’s BOP position is at deficit in the annual data of FY 2021/22 by NPR 255.25 billion compared to a surplus of NPR 1.22 billion during the same period last year. On the other hand, the current account remained at a deficit of Rs.623.32 billion in the review period compared to a deficit of Rs.333.67 billion in the same period of the previous year. In the review year, capital transfer decreased 34.5 percent to Rs.9.99 billion and net foreign direct investment (FDI) decreased 4.9 percent to Rs.18.56 billion. In the previous year, capital transfer and net FDI amounted to Rs.15.26 billion and Rs.19.51 billion respectively.


The workers’ remittance growth rate is subject to different terms of US Dollar and Nepalese Currency based on exchange rate of NPR with US Dollar. Hence, the workers’ remittance growth in terms of US Dollar and NPR has been presented below:

Remittance in Dollar Terms

In US Dollar terms, the workers’ remittance increased by 2.16% to 8,325.81 million in FY 2021/22 compared to an increase of 8.19% in FY 2020/21.

Remittance in NPR terms

On the other hand, in NPR terms, the workers’ remittance increased by 4.81% to 1007.31 billion in FY 2021/22 compared to a rise of 9.83% in FY 2020/21.

Number of Nepali workers (institutional and individual-new and legalized) taking approval for foreign employment increased significantly to 354,660 in the review year. It had decreased 62.8 percent in the previous year. The number of Nepali workers (Renew entry) taking approval for foreign employment increased 198.5 percent to 282,453 in the review year. It had decreased 46.8 percent in the previous year.