Himal Press 
KATHMANDU: The economy is projected to expand by 3.51% in the third quarter of the current fiscal year 2025/26 on a seasonally unadjusted basis compared with the same period of the last fiscal year.
According to preliminary estimates released by the National Statistics Office (NSO) on Monday, the expansion is primarily driven by strong performances in electricity generation and distribution, increased banking activities, such as deposit collection and credit flows, non-life insurance premium collections, and trade services.
On a quarter-on-quarter basis, the seasonally adjusted GDP grew by 0.58% in the third quarter compared to the second quarter of the same fiscal year.
Out of the 18 major industrial classifications tracked by the NSO, 16 sectors recorded positive year-on-year growth. The electricity and gas sector emerged as the primary engine of economic expansion in the review quarter with the highest growth rate of 24.88%. Financial and insurance activities also posted strong growth of 10.27%, followed by transport and storage at 7.83%.
The wholesale and retail trade sector, which represents the second-largest component of the national economy, grew by 5.25% due to an uptick in both domestic production and the import of tradeable goods. Meanwhile, the crucial agriculture, forestry and fishing sector, which makes the largest contribution to the overall economy, registered a modest growth of 1.58%. While a decline in paddy cultivation weighed heavily on agricultural figures, steady outputs in livestock, vegetables, fruits and forestry managed to keep the sector in positive territory, according to NSO forecasts.
Despite the overall positive trend, the NSO said the growth rate has remained moderate due to some setbacks like a decline in the imports of construction materials, lower paddy yields and a slowdown in the domestic manufacturing of certain products. Specifically, the public administration and defense sector contracted by 1.59%, while industrial manufacturing shrank by 0.54%. The remaining industrial sectors experienced normal or baseline growth during this period.
When factoring in seasonal adjustments to compare the third quarter directly with the immediate second quarter of 2025/2, economic activity showed a conservative rise of 0.58%. In this comparison, 11 out of 18 sectors saw positive growth, led by electricity and gas at 6.87%, mining and quarrying at 2.23%, and wholesale and retail trade at 2.02%.
Conversely, seven sectors witnessed a quarter-on-quarter contraction. The agriculture sector dipped marginally by 0.04%, while accommodation and food services dropped by 2.30%, banking and insurance fell by 1.07%, and manufacturing decreased by 0.83%.
Data from the past five fiscal years show quarterly GDP growth peaked in the fourth quarter of 2021/22 and hit its lowest point in the second quarter of 2022/23.
