Nepal cuts growth forecast to 3.5 percent in mid-year budget review

February 11, Kathmandu: The government has lowered Nepal’s economic growth forecast to 3.5 percent for the current fiscal year, down from the earlier projection of 6 percent, according to the mid-year budget review.

The downward revision follows a decline in paddy production, reduced cultivated area and productivity, sluggish construction activity, and a slowdown in real estate transactions. Nepal’s gross domestic product (GDP) growth was estimated at 4.6 percent in the previous fiscal year.

The review report said GDP at basic prices grew by a preliminary 3 percent in the first quarter, compared to a revised 2.9 percent growth in the same period last year.

Agricultural gross value added is projected to expand by 1.36 percent in the first quarter, reflecting lower paddy output despite expected increases in livestock, vegetable, and fruit production. Output of maize, millet and buckwheat is expected to rise.

Industrial sector value added is estimated to grow by 5.44 percent, supported by expansion in energy and construction activities, while manufacturing is projected to grow by 1.52 percent.

Service sector growth is estimated at 3.03 percent, driven by wholesale and retail trade, financial services, public administration, tourism and personal services.

Average inflation stood at 1.7 percent in the first six months, down from 4.97 percent a year earlier.