Economy to grow at 23-yr-high of 6.9pc

April 26, 2017

The Kathmandu Post, Rupak D Sharma, 26th April 2017, Kathmandu

The country’s economy is projected to expand at the fastest pace in over two decades in this fiscal year driven by a bumper agricultural output, sharp decline in number of protests and steady supply of electricity.

The figure released on Tuesday by the Central Bureau of Statistics (CBS), the government’s statistics agency, shows the country’s gross domestic product (GDP) growing at 6.9 percent at basic prices in 2016-17, the highest since fiscal year 1993-94 when the economy expanded by 8.2 percent.

The government’s preliminary growth forecast is higher than its previous estimate of 6.5 percent. This is probably the first time in the recent history that the government had beaten its own economic growth target.

The country is expected to achieve 23-year-high economic growth rate on the back of a good monsoon, which is expected to raise agricultural output, steady supply of electricity, which has eased problems of enterprises, and improvement in law and order situation due to sharp decline in protests, according to Chandra Kumar Ghimire, member secretary of the National Planning Commission, the parent body of the CBS.

With this impressive growth in economic output, per capita income of Nepalis is expected to jump to Rs91,488 ($862) in the current fiscal year. 

Nepal has been grappling with a long spell of subpar growth, with average GDP expanding at a rate of less than 4 percent per annum in the last one decade. 

The highest growth rate achieved by the country in the last ten years was 5.7 per cent. That was in 2013-14. But this achievement is now considered as a blip, as the economic growth rate tumbled to 3 percent in 2014-15 due to devastating 7.8-magnitude earthquake. As the country was trying to recover from the disaster, another tragedy struck the country after India imposed trade blockade from the fourth week of September 2015 to the first week of February 2016. The trade embargo halted supply of everything from daily essentials, raw materials to petroleum products. This sent the economy into a painful tailspin, restricting growth-as per the revised figure-to 0.01 percent, the lowest since fiscal year 1982-83. 

Finally, signs of recovery have started emerging, as the health of all the sectors has improved.


The torchbearer of growth in the current fiscal year is the agricultural sector, which is expected to expand by 5.3 percent. The sector is likely to expand at this rate because of projected 21.7 percent surge in paddy production. Paddy alone makes a contribution of 20.7 percent to the agricultural output. Also, production of other crops, like wheat, maize, millet, potato and vegetables, is expected to increase in the current fiscal year.

“The agricultural sector as a whole made an impressive performance because of good monsoon, smooth supply of agricultural inputs, better irrigation facilities and availability of farm insurance schemes,” Ghimire said.

Despite this, the contribution of the agricultural sector in the GDP is expected to dip to 29.4 percent in the current fiscal year from 31.6 percent recorded in the last fiscal year.

“This is because other sectors have also performed well this year,” said CBS Director General Suman Raj Aryal.

The output of the construction sector, for instance, is expected to grow by 11.7 percent in the current fiscal year. This is largely because of normalisation in the supply situation. With this, the share of the construction sector in the GDP is forecast to stand at 7.2 percent in this fiscal year from 6.8 percent a year ago.

This kind of feelgood factor has also trickled in the manufacturing sector, which is expected to grow by 9.7 percent in the current fiscal year, while the wholesale and retail trade sector, which has been bulging over the years due to surge in remittance-fuelled consumption, is projected to expand by 9.8 percent. 

The almost-10-percent growth recorded by the wholesale and retail trade sector, however, is unlikely to increase its share in the economic pie, as the contribution of the sector to the GDP is expected to contract to 13.5 percent in the current fiscal year from 14.1 percent a year ago. Is this the effect of deceleration in the flow of money sent home by Nepalis working abroad is yet to be determined.

Among others, real estate, rental and other businesses, which make a contribution of 9.9 percent to the GDP, is expected to expand by 5.3 percent, while the education sector, which holds a share of 7.2 percent in the economic output, is projected to grow by 4.2 percent.


Considering the growth recorded by all these sectors, Nepal is expected to produce goods and services worth Rs2,599 billion rupees in the current fiscal year.

Key indicators

Indicators                              2014/15    2015/16    2016/17

GDP growth % (basic prices)    2.97            0.01    6.94

GDP (Rs in bn)                       2,130.2    2,247.4    2,599.2

Per capita income (Rs)              77426    80525    91488

Gross domestic saving as % of GDP    9.21    3.82    10.25

Gross national saving as % of GDP    44.14    39.96    43.78

Gross fixed capital formation as % of GDP    27.97    28.80    33.80

Source: CBS


Growth forecast by various institutions

Institution                              Forecast

Government                             6.5%

Asian Development Bank         5.2-6.2%

International Monetary Fund      5.5%

World Bank                             6%