Nepal Economy Update December 2025: Inflation Falls, Forex Reserves Rise

Nepal’s macroeconomic conditions continued to stabilise in November 2025, supported by easing inflationary pressures, strong foreign exchange reserves, and a sustained balance of payments surplus. According to the latest Nepal Economy Update released by CareEdge Nepal, softer food prices and a comfortable external position helped cushion the economy despite moderation in remittance inflows and a sequential slowdown in merchandise trade.

Key Economic Developments

Consumer price inflation moderated to 1.1% year-on-year in mid-November, down from 1.5% a month earlier. This decline was largely driven by deeper deflation in food and beverage prices, which contracted by 3.3% year-on-year, while non-food and services inflation eased marginally to 3.7%

Nepal’s external buffers strengthened further, with foreign exchange reserves rising to a record USD 21.5 billion, reflecting a 10.2% increase since mid-July. The current reserve level is sufficient to cover 17.4 months of projected merchandise and services imports, reinforcing external sector resilience. Remittance inflows, however, softened sequentially to Rs 133.8 billion in mid-November from Rs 201.2 billion in the previous month.

Merchandise exports declined for the second consecutive month to Rs 20.7 billion, while imports eased to Rs 141.4 billion. Despite the month-on-month moderation, both exports and imports recorded year-on-year growth. The trade deficit narrowed modestly to Rs 120.7 billion, compared to Rs 137.5 billion in the preceding month.

During the first four months of the fiscal year, Nepal posted a current account surplus of Rs 279.7 billion, nearly double the level recorded in the same period last year. Net capital transfers improved, while foreign direct investment inflows moderated. Overall, the balance of payments surplus expanded to Rs 318.4 billion.

Tourism indicators showed limited recovery, with tourist arrivals declining 9.3% month-on-month in mid-November. On a year-on-year basis, arrivals were marginally higher at 1.8%, indicating a subdued rebound in the sector.

Read Detailed Report: Nepal Economy Update - December 2025