Quakes rattle economy, growth falls to lowest in seven years
KATHMANDU: The devastating earthquake of April 25 and subsequent aftershocks have caused huge damage to the country’s economy, shaving an estimated Rs 36.52 billion off the projected gross domestic product of this fiscal year, show the latest data of the Central Bureau of Statistics.
The country’s GDP — the sum of all goods and services produced in a year — was expected to stand at Rs 2.16 trillion prior to the earthquake. That figure has now been revised downwards to Rs 2.12 trillion.
Also, economic growth rate, which was projected to hover around 4.58 per cent at basic price, prior to the
earthquake, is expected to stand at 3.04 per cent — the lowest in the last seven years.
The last time the economy had expanded at such a slow pace was in fiscal 2006-07, when growth rate stood at 2.75 per cent.
“The economic growth forecast of three per cent for this fiscal is disappointing. But a slump in output was not unexpected considering the colossal damage caused by the earthquake,” Swarnim Wagle, member of the National Planning Commission, which oversees the CBS, told journalists at a press meet held in Kathmandu today.
April 25 temblor and aftershocks shave 1.54 percentage points off GDP growth, Rs 2,319 off per capita income
Nepal’s economic growth stood at 5.05 per cent in the last year, as per the revised estimate of the CBS.
Although the country was not expecting growth of that level this fiscal because of deceleration in agricultural output — mainly due to delayed monsoon — many were not anticipating a disappointing report card either because of gains made in the energy sector and growing investor confidence.
“The earthquake was, thus, a big setback for a country which was gearing to move to a higher growth trajectory,” Wagle said.
One of the sectors that was badly hit by the earthquake and subsequent aftershocks was the real estate, which contributes around nine per cent to the GDP.
The sector, which was anticipating growth of 4.86 per cent prior to the earthquake, is now expected to expand at a very slow pace of 0.77 per cent, show the CBS data.
This drag is expected to affect the financial sector, which has significant exposure to the real estate sector.
Financial sector’s growth is expected to drop to 1.37 per cent this fiscal, from pre-earthquake estimate of 2.01 per cent.
Also, agriculture and forestry sector, which makes largest contribution of around 31 per cent to the GDP, is expected to expand at slower pace of 1.79 per cent from previous estimate of 2.17 per cent.
“Although harvesting season was almost over when the earthquake hit the country, the sector took a beating because of losses suffered by the poultry and livestock sectors (where production of meat and milk is expected to fall),” said Wagle.
Also, chances of these sectors facing higher mortality rate are moderate to high because of shortage of feeds and lack of proper shelter, Wagle added. “This may hit the agriculture sector next fiscal as well.”
Surprisingly, the only sector that appears to have benefited fromthe disaster is health and social work because of higher demand for health services in the aftermath of the earthquake.
Although the sector’s growth is expected to jump to 10.04 per cent from previous estimate of 9.82 per cent, it will not be able to lift the economy, as its contribution to the GDP stands at mere 1.70 per cent. As production of goods and services in almost every sector has fallen, average income of every
Nepali is now expected to shrink by Rs 2,319 from the pre-earthquake level.
Per capita GDP of Nepalis was estimated to stand at Rs 77,311 prior to the earthquake. The figure has now been revised to Rs 74,992.