Country's GDP forecast to contract to 2.1 percent

KATHMANDU, OCTOBER 19: Nepal’s Gross Domestic Product (GDP) is projected to grow by only 2.1% in the fourth quarter (Q4) of the fiscal year 2080/81, according to the National Statistics Office. The slower growth reflects a mixed performance across sectors, with agriculture, tourism, and public administration contributing to modest expansion, while industries like construction show signs of contraction.

The primary drivers of economic growth this quarter are improvements in agricultural production and an increase in tourist arrivals, which boosted activity in the hotel sector. The growth in trade, transportation, and public administration has also contributed positively to the economy.

Nepal’s GDP growth rate has been decelerating over the fiscal year. The first quarter saw a 4.5% increase, followed by 4.6% in the second quarter and 3.1% in the third. In comparison, the same period last year recorded a 3.7% increase, while the GDP growth rates for fiscal years 2078/79 and 2077/78 were 9.4% and 11.2%, respectively.

Out of 18 industrial sectors, 15 have shown positive value-added growth this quarter. Notable gains were recorded in housing, food, and services (12.3%), transportation and warehousing (10.9%), and public administration (10.8%). However, some sectors are expected to contract, including construction (-13.4%), electricity, gas, and air conditioning (-3.5%), and information and communication (-1.6%).

Agriculture, forestry, and fishery registered 3.2% growth, driven by winter crops, vegetables, and livestock production. In the wholesale and retail trade sector, a 2% increase was supported by local agricultural output, although the slight decline in imports limited further growth.

After seasonal adjustments, GDP is expected to grow by only 1.0% in Q4 compared to the previous quarter. Among the highest-performing sectors, mining and quarrying posted 23.4% growth, followed by electricity and gas at 4.2%. Conversely, the information and technology sector experienced a decline of 4.9%, and transportation and warehousing saw 4.14% growth.

While the overall economic momentum has slowed, agriculture and tourism continue to show positive trends, suggesting the potential for stable long-term recovery. However, the contraction in construction and communication sectors presents challenges that could temper future growth.