Nepal Economic Growth Estimated at 3.99% in FY 2081/82

Nepal Economic Growth Report 2081

Nepal’s economy is projected to grow, but the overall growth rate for the current fiscal year is expected to remain below the target set by the government. According to the annual national accounts estimate released by the National Statistics Office on Wednesday, the country’s economic growth rate at basic prices is estimated to be 3.99 percent in fiscal year 2081/82. The government had targeted a 6 percent growth rate.

Despite negative growth last year in key sectors like industry, construction, and trade, these sectors have shown positive signs this year. However, the overall national growth rate is expected to remain around 4 percent. The office published national account statistics based on actual data from the first nine months of the fiscal year (up to Chaitra) and projections for the remaining three months (Baisakh to Asar).

Last fiscal year, the estimated growth rate at basic prices was 3.54 percent, later revised to 3.36 percent. This is lower than the projections made by institutions like the World Bank and the Asian Development Bank, which had forecasted growth rates of 4.5 percent and 4.4 percent, respectively, for 2025.

Contribution and Growth Rate by Sector (In Percent)

Economic Growth by Consumer Price

The economic growth rate by consumer price this year is estimated at 4.61 percent. The revised estimate for the previous fiscal year (2080/81) was 3.67 percent. In fiscal year 2079/80, it was only 1.98 percent. Consumer price includes tax and subsidies, which causes the growth rate to appear higher than at basic prices. However, due to an 18 percent decline in revenue collection, the growth rate of consumer prices seemed higher than at basic prices three years ago. Since last year, this trend has returned to previous patterns.

According to Chief Statistician Madhusudan Burlakoti, if there are no major disruptions in the remaining months of the fiscal year, Nepal is expected to achieve 3.99 percent growth at basic prices and 4.61 percent at consumer prices.

Last year, three sectors experienced negative growth. This year, all sectors show positive performance, indicating that the estimated growth is achievable. The agriculture sector is projected to grow by 3.28 percent, and the non-agriculture sector by 4.28 percent. In comparison, revised figures from 2080/81 show 3.35 percent growth in agriculture and 3.36 percent in non-agriculture. In 2079/80, growth was 3.02 percent and 1.98 percent, respectively.

Growth by Economic Sector

Economic sectors are grouped into three main categories for GDP analysis: primary, secondary, and services. The preliminary growth rates for fiscal year 2081/82 are:

• Primary sector: 3.25 percent

• Secondary sector: 4.65 percent

• Service sector: 4.21 percent

In 2080/81, the revised figures were:

• Primary: 3.35 percent

• Secondary: –0.03 percent (negative)

• Services: 4.35 percent

The economy’s size (GDP) is projected to reach NPR 6.17 trillion by the end of this fiscal year, an increase of approximately NPR 400 billion compared to the previous year. The previous estimate for 2080/81 was NPR 5.74 trillion, later revised to NPR 5.79 trillion. For 2079/80, the size was estimated at NPR 5.37 trillion.

Per Capita Income

Nepal’s per capita income is expected to reach USD 1,517 this fiscal year. The revised estimate for the previous year was USD 1,467, and in 2079/80, it was USD 1,410.

GDP Contribution by Sector (Estimated for 2081/82)

• Primary Sector: 25.6%

• Secondary Sector: 12.4%

• Service Sector: 62.0%

In 2080/81:

• Primary: 25.2%

• Secondary: 12.4%

• Services: 62.4%

Sector Highlights

• Electricity and Gas is projected to grow the most (13.82%), attributed to expansion in hydropower generation and consumption. Last year’s growth was 10.96%.

• Transportation and Storage is estimated to grow by 9.45%, supported by increased vehicle imports and tourism.

• Education will grow by 1.98%, and Mining and Quarrying by 1.99%.

• Agriculture, Forestry, and Fisheries are expected to contribute 25.16% to GDP, and Trade 14.55%.

• Water supply and waste management contribute 0.42%, and mining and quarrying contribute 0.46%.

• The industry is forecast to grow by 3.78%, contributing 4.98% to GDP. Last year, this sector had a negative growth rate of –2.02%. The report mentions significant improvements due to the rise in production of vegetable oil, plywood, plastic pipe fittings, beverages, cement, and soap. The increase in the imports of raw materials like soybean oil, galvanized sheets, iron rods, and coal has also driven industrial recovery.

• Construction is expected to contribute 5.24% to GDP, with a value-added growth rate of 2.21%. The sector has shown negative growth over the past two years, but this year, it has shown improvement due to increased imports of construction materials and related industrial goods.

• Trade is forecast to contribute 14.55% to GDP, with a 3.30% growth rate. Growth in imports and domestic production of agricultural and trade-related goods supports this.

• Accommodation and Food Services will contribute 2.46% to GDP, growing at 5%, driven by increased domestic and foreign tourism. Last year’s growth was estimated at 21.03%.

• Information and Communication is projected to grow by 4.81%, contributing 1.94% to the GDP. This growth is attributed to expansion in computer programming, internet service providers, and wireless communication services.

Other Key Indicators

• Gross fixed capital formation (GFCF) is projected at 24.07% of GDP this year, slightly down from 24.33% last year.

• Consumption expenditure is estimated at 93.45% of GDP, compared to 93.78% last year.

• National savings are projected to reach 36.24% of GDP, up from 35.39%.

• Remittance inflow is expected to account for 25.89% of GDP, slightly up from 25.32% last year.

As per the fourth version of the International Standard Industrial Classification (ISIC), Nepal’s economic activities have been classified into 21 major categories for this report.