Economy to grow by 0.77 per cent

Kathmandu, May 3

The country’s economy is projected to grow at a sluggish pace of 0.77 per cent this fiscal, as retail and wholesale trade and construction and manufacturing sectors are likely to take a dip due to supply disruption triggered by blockade on Nepal-India border points.

The estimated growth for this fiscal year calculated in basic prices is the weakest since fiscal year 2001-02, when gross domestic product increased by 0.16 per cent, show the data released today by the Central Bureau of Statistics, the official government body that calculates the GDP.

Although the projected growth rate is the lowest in 14 years and lower than the government’s revised estimate of two per cent, many are optimistic about economy’s revival in the next fiscal year.

“The supply situation has normalised and expenditure on post-earthquake reconstruction works is expected to go up in the next fiscal year,” said CBS Director Ishwori Prasad Bhandari.

After grappling with a long spell of subpar growth, Nepal’s GDP, as per revised figure, expanded by 5.72 per cent in 2013-14.

That was quite a turnaround considering growth rates that hovered between three and four per cent in the previous years.

This sign of economic revival, however, did not persist for long, as devastating earthquakes hit the country in 2015. The destruction, as per initial estimates, limited economic growth to 3.04 per cent.

It has now been confirmed that quake-related damages were severer than initially thought, as the CBS has just revised the growth of that fiscal downward to 2.32 per cent.

Despite this setback, many were expecting economic activities to pick up this fiscal because of higher spending in post-quake reconstruction works.

But things did not go as per the plan because of disruption in supply system triggered by protests in the Tarai, which resulted in blockade on Nepal-India border points.

The blockade, which prolonged for around four-and-a-half months from fourth week of September to February 6, hit supplies of petroleum products, raw materials and other essential goods.

This dealt a severe blow to the manufacturing sector, which is expected to contract by 9.86 per cent this fiscal, show the CBS data. The negative growth is likely to reduce the sector’s contribution to the economy to 5.53 per cent in the current fiscal year from as high as 9.03 per cent in fiscal year 2000-01.

The supply disruption is also likely to reduce the output of the construction sector which accounts for almost seven per cent of the economy  by 3.98 per cent this fiscal. This is because most of the post-quake reconstruction and regular construction works could not take place.

The situation is the same in the retail and wholesale trade, which is likely to contract by 1.13 per cent this fiscal due to fall in imports and industrial production.

Retail and wholesale trade makes a contribution of 14.23 per cent to the economy.

While these three sectors, which contribute little more than a quarter to the economy, slumped, agriculture sector grew at a modest pace of 1.14 per cent, as production of paddy, wheat and millet fell due to unfavourable monsoon.

Average Nepali income Rs 80,921

KATHMANDU: Average income of each Nepali is likely to go up by Rs 3,842 this fiscal, marking a growth of mere 4.98 per cent.

Per capita income of Nepalis is likely to stand at Rs 80,921 this fiscal, as against Rs 77,079 in the last fiscal year, show the data released on Tuesday by the Central Bureau of Statistics.

This income growth is negative in real terms considering average inflation of 9.7 per cent so far this fiscal.

Per capita income in terms of US dollar, however, is expected to dip to $766 in this fiscal from $775 in the last fiscal.

The fall comes as Nepali rupee weakened to an average of 105.60 per US dollar in this fiscal, as against 99.49 recorded in the last fiscal.