Kathmandu, Feb 11: The government has projected that the country’s economic growth rate will be limited to 3.5 percent. The revised estimate was made public in the mid-year review of the current fiscal year 2025/26 budget.
Earlier, the annual growth rate of Gross Domestic Product (GDP) for the current fiscal year had been estimated at 6 percent. However, due to a decline in paddy production, cultivated area and productivity, sluggishness in the construction sector, and a downturn in the real estate market, the mid-year review has revised the growth projection downward to 3.5 percent. In the previous fiscal year, GDP growth was estimated at 4.6 percent.
According to the mid-term budget evaluation report, GDP at basic prices is estimated to have grown by three percent in the first quarter of the current fiscal year. In the same period of the previous fiscal year, GDP at basic prices had grown by a revised estimate of 2.9 percent.
In the first quarter of the current fiscal year, the total value added of the agricultural sector is estimated to have expanded by 1.36 percent compared to the same period last year. The comparatively low growth is attributed mainly to a decline in paddy production, despite expected increases in livestock, vegetable, and fruit production. Production of maize, millet, buckwheat, and other food crops is, however, projected to increase this fiscal year. In the previous fiscal year, production of major food crops such as paddy, wheat, and maize increased by 2.67 percent, while cash crops grew by 2.01 percent.
During the first quarter of the current fiscal year, the total value added of the industrial sector is estimated to have expanded by 5.44 percent compared to the same period last year. Expansion in energy and construction activities is expected to have a positive impact on the overall industrial sector. The value added of the manufacturing sector is projected to grow by 1.52 percent in the first quarter.
Similarly, the service sector’s total value added is estimated to have expanded by 3.03 percent during the same period. Growth in wholesale and retail trade, financial intermediation, public administration and defence, tourism activities, and personal services is expected to contribute positively to the overall service sector.
According to the mid-term budget review report, the average inflation rate during the first six months of the current fiscal year stood at 1.7 percent, compared to 4.97 percent during the same period last year. #nepal #budget #economy
