KATHMANDU: The government has revised the country’s economic growth projection to 3.5 percent for the current fiscal year, according to the mid-term review of the annual budget.
Earlier, the government had estimated that the gross domestic product (GDP) would grow by six percent in the ongoing fiscal year. However, citing a decline in paddy production, reduced cultivation area and productivity, sluggishness in the construction sector, and a downturn in real estate transactions, the revised projection has been lowered to 3.5 percent.
In the previous fiscal year, the GDP growth rate is estimated to have stood at 4.6 percent.
As per the mid-term evaluation report, GDP at basic prices is estimated to have grown by three percent in the first quarter of the current fiscal year. The revised estimate for the same period last fiscal year shows a growth of 2.9 percent.
In the first quarter of the current fiscal year, the gross value added (GVA) of the agriculture sector is estimated to expand by 1.36 percent compared to the same period last year.
The report states that the overall growth in agricultural GVA is expected to remain relatively low, mainly due to a decline in paddy production, despite anticipated increases in livestock, vegetable, and fruit output.
Production of food crops such as maize, millet, and buckwheat is, however, projected to increase this fiscal year. In the previous fiscal year, the production of major food crops including paddy, wheat, and maize grew by 2.67 percent, while cash crop production increased by 2.01 percent.
The industrial sector’s GVA is estimated to expand by 5.44 percent in the first quarter of the current fiscal year 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 GVA of the manufacturing sector is projected to grow by 1.52 percent during the review period.
Similarly, the service sector’s GVA is estimated to increase by 3.03 percent in the first quarter compared to the same period last fiscal year. Growth in wholesale and retail trade, financial intermediation, public administration and defense, tourism-related activities, and personal services is expected to support overall expansion in the 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, down from 4.97 percent recorded in the same period last year.
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