According to the 'National Accounts Statistics' released on Tuesday, despite of shrinkage in growth rate compared to the last FY, there are positive signs in some key sectors of the economy. The projection is based on the assumption that the war in the Middle East will end soon which will deduct the price of petroleum products and the projects that are expected to be completed by the current FY will be completed soon.
Electricity sector grows by 20.93%
This year's economic growth seems to be mainly driven by the hydropower sector. The electricity and gas sector is expected to grow by 20.93 percent due to the addition of new projects to the national grid and increase in the domestic consumption and export. This is the highest growth among the 21 overall industrial classifications.
Likewise, the financial and insurance sectors is expected to grow by 9.16 percent and the transport and storage sectors increased 5.79 percent that will further accelerate the economy.
Decline in rice production hits agriculture
The main cause of missing the targeted economic growth has been the weak performance of the agriculture sector. The growth rate of the agricultural sector, which accounts for about one-fourth of the GDP, is estimated to be limited to 1.58 percent this year. In particular, the production of paddy, the main crop of the country, has decreased by 4.16 percent and the low production of other winter crops has affected the overall economic growth, said Dhundiraj Lamichhane, spokesperson of the office.
Economy's size rises to Rs 66 trillion
Although there is some slowdown in the growth rate, the size of Nepal's economy is estimated to reach Rs 6.6 trillion. In terms of per capita income, although the per capita GDP has limited to USD 1,513, the per capital disposable income has reached USD 2,044.
U-turn in industry and construction
The industry and construction sector, which had suffered negative growth in the previous years, has seen improvement this year. The industrial sector is projected to expand by 2.83 percent and the construction sector by 2.21 percent due to increased production of construction materials such as cement and iron rods and improvement in demand from the private sector. However, the growth of the construction sector has not yet been encouraging due to stagnant capital expenditure by the government.
According to the office, the contribution of the service sector to the GDP will remain 61.8 percent this year which indicates that Nepal's economy is gradually becoming service-oriented.
