Positive Growth Index

Nepal’s economy continues to struggle to come out of devastating impact of COVID-19 pandemic that pushed a sizable number of people into poverty. Still around 20 per cent Nepalis live below the poverty line. The unemployment rate has not declined owing to the limited job opportunities and shrinking industrial sector. Hundreds of Nepalis are forced to leave the country in search of better job opportunity, education and social security in foreign countries. As the capital spending has not grown as targeted by the government, infrastructure development has been frustratingly sluggish. Soaring inflation and trade deficit, corruption, high interest rates and climate change triggered crisis have further buffeted the national economy. 

Political instability has been attributed for the slow progress in the building of big infrastructure projects. However, international lending agencies such as International Monetary Fund, World Bank and Asian Development Bank have painted a promising scenario of Nepal's Gross Domestic Growth (GDP) prospects in 2025.They have projected that its economy will grow by 4.9 per cent in 2025, citing a number of factors, including good agricultural harvests, increase in tourist arrival, electricity production and capital spending, and flexible monetary policy. This positive forecast is indeed encouraging for Nepalis beset by economic hardships. 

In a prelude to the 2025 economic prospects, the National Statistics Office (NSO) Tuesday made a preliminary estimate of 3.4 per cent growth in the GDP at the constant price in the first quarter of the current fiscal year 2024/25 compared to the corresponding period of the previous fiscal year. It is the NSO’s seasonally unadjusted quarterly GDP report. The GDP growth has been boosted by the increase in agricultural production, electricity generation and distribution, tourism arrivals, and the total value addition in the hotel sector. Transportation sector, healthcare services and public administration have also contributed to the overall economy. The country could have achieved more GDP growth if it had not suffered from floods and landslides and slackness in the construction sector.

According to a news report published in this daily the other day, the total value-added growth rate of 17 industrial sectors out of 18 industrial classifications has been positive. Of them, electricity and gas-related activities have registered the highest growth rate of 21.4 per cent, while the transportation and storage sector has become the second fastest-growing industrial sector with a growth rate of 6.7 per cent. The value addition of accommodation and food service sector is expected to rise by 6.3 per cent. In a similar manner, the value-added growth rate of the financial and insurance sector is estimated to be 5.7 per cent due to the increase in deposits and loans. 

The agriculture, forestry and fisheries sector will grow by 3 per cent. The increase in the production of summer crops, vegetable and cash crops and livestock production have significantly contributed to the GDP. The timely availability of fertilisers, the use of improved seeds, and adequate monsoon rainfall have contributed to the bumper paddy production. The wholesale and retail trade sector is estimated to grow by only 0.5 per cent. The value-added growth rate of the manufacturing sector remained positive at 2.3 per cent.  On the negative side, the construction sector is estimated to have contracted slightly (0.3 per cent) with significant drop in imports of construction materials. In order to accelerate the pace of development, the government must bring out strategic programmes to enhance the capacity of spending of capital budget for completing big development projects and creating ample employment opportunities.