GDP growth target lowered to 2.1pc

Himalayan News Service

Kathmandu, June 24:

Due to a dramatic fall in growth of non-agriculture sector, the GDP growth has been revised lowering it to 2.1 per cent during the current fiscal year, less than half of the budgetary target of about four per cent. “The downturn in growth of non-agricultural sector and agriculture sector, particularly in paddy production, is the main reason that the GDP growth estimate has been lowered to 2.1 per cent from prior target of about four per cent,” states Nepal Rastra Bank (NRB), in its recent macro-economic situation report, released today.

Citing the findings of the Central Bureau of Statistics (CBS), the central bank said that the growth in agriculture and non-agriculture sector is estimated at 2.8 per cent and 1.6 per cent respectively. The budgetary targets for these two sectors were at 3.7 per cent and 4.6 per cent respectively.

During the first nine months of current fiscal year, trade deficit, however, has declined by 12.2 per cent, thanks to decline in imports. The total exports increased by 3.6 per cent to Rs 41.9 billion while total imports declined by 5.7 per cent to Rs 93 billion resulting in the corresponding decline in trade deficit by 12.2 per cent to Rs. 51.1 billion. Despite the increase in exports, total trade declined by 3.0 per cent due mainly to the decline in imports. In the corresponding period of the previous year, exports had gone up by 6.7 per cent and imports by 8.0 per cent leading to a nine per cent growth in trade deficit. Under the government’s budgetary operation for the period, total government expenditure increased by 8.9 per cent to Rs 53.5 billion compared to a rise of 11.8 per cent last year. Of the total expenditure, recurrent expenditure stood at Rs 38.8 billion (72.5 per cent), while the capital expenditure at Rs 6.9 billion (13.0 per cent) and principal repayment at Rs 6.4 billion. The national inflation level witnessed a sharp increment due to a rise in the prices of housing goods and services, transport and communication, and restaurant meals. The National Urban Consumer Price Index (CPI), on a point-to-point basis, increased by 5.8 per cent compared to an increase of 1.7 per cent last year. The rise in the price of grains and cereals products, vegetables and fruits, meat, fish and eggs as well as sugar and related products also contributed to the upward pressure in price index this year.