Growth Projection

As the economy is struggling to come out of the crippling impact of recession, here is good news – it is gradually improving since the last fiscal year. According to an estimate of National Statistics Office (NSO), Nepal’s economy is set to grow by 3.87 per cent in the current fiscal year 2023/24. However, this preliminary projection is much lower than the government’s target of 6 per cent for the current fiscal. The size of economy is estimated to reach Rs. 5,704.87 billion in the current fiscal year from Rs. 5,348 billion last year. The upward trajectory of the economy has become possible with the expansion of the service sector. The economy has been reeling from crisis with outbreak of COVID-19 pandemic from the beginning of 2020. All areas of economy was brought to its knees and its repercussions are still felt in the commerce and business. 

These days a considerable number of retailors have shut down their businesses and those operating are running below expectations. As the people lack savings and purchasing power, both demand and supply sides have shrunk, despite several fiscal incentives and flexible monetary policy of Nepal Rastra Bank. The NSO’s annual national accounts statistics offers some hope for the economic revival in the wake of 3rd Investment Summit where the foreign investors have pledged to invest in various infrastructure projects vital for employment generation. The NSO unveiled the growth rate on the actual data of 6-8 months of this year. 

Gross domestic product in basic prices will be at 3.53 per cent in the current fiscal year. The economic growth rate in consumer prices has been estimated to be at 1.95 per cent in the last fiscal year 2022/23 and 5.63 per cent in the fiscal year 2021/22. The primary and service sectors have contributed to the national economy but the role of the secondary sector has declined. The primary, secondary and service sectors are estimated to contribute 24.6 per cent, 12.5 per cent and 62.9 per cent respectively to the gross domestic product in the current fiscal year. The growth rate of primary, secondary and service sectors is estimated to be 3.03 per cent, 1.20 per cent and 4.50 per cent respectively. 

The growth rate of primary, secondary and service sectors stood at 2.72 per cent, 1.40 per cent and 2.36 per cent respectively in the last fiscal year. Agriculture has been the mainstay of Nepal's economy but it is not still in top priority when it comes to providing incentives to the farmers. It is also facing labour shortage with the youths leaving for abroad en masse. Despite this, the growth rate of the agricultural sector is projected to increase by 3.05 per cent in current fiscal year from 2.76 per cent last year. The surge in the production of rice, pulses, vegetables, cash crops and the increase in livestock products has improved the value addition of this sector. 

However, non-agriculture sector's growth (3.75 per cent) is not so optimistic. The industrial sector is estimated to be negative (1.60 per cent). The construction and trade sectors have not fully revived. With the decline in demand for goods and services, manufacturing industry has not performed well. According to the NSO, the GDP per capita is estimated to be at USD 1,434 USD in the current fiscal year. The GDP per capita is estimated to increase at USD 1,434 USD in the current fiscal year from 1,389 USD last fiscal year, which indicates at improving health of the national economy.