Q1 GDP growth estimated at 3.4%

KATHMANDU: Nepal’s Gross Domestic Product (GDP) grew by 3.4% in the first quarter of fiscal year 2024/25 compared to the same period last year, according to preliminary estimates released by the government. However, the seasonally adjusted figures show only a marginal growth of 0.2 percent compared to the previous quarter.

According to the National Statistics Office (NSO), the growth was primarily driven by increases in electricity production and distribution, tourism-related activities, and agricultural output. The electricity and gas sector emerged as the strongest performer with a 21.4% growth, while transportation and storage followed with 6.7% growth. The hospitality sector, which benefited from increased tourist arrivals, recorded 6.3% growth.

Agriculture, which constitutes the largest share of Nepal’s economy, grew by 3%. The sector’s performance was attributed to improved paddy production and growth in vegetable and cash crops, supported by timely availability of fertilizers, use of improved seeds and adequate monsoon rains. However, floods and landslides during the rainy season prevented the sector from achieving higher growth, according to the NSO.

The financial and insurance sector showed promising growth at 5.7%. Professional, scientific, and technical services grew by 5.1%, while administrative support services expanded by 5.4%.

However, some sectors have shown concerning trends. The wholesale and retail trade sector, the second-largest component of Nepal’s economy, registered only 0.5% growth. The construction sector experienced a slight contraction (-0.3%), primarily due to decreased imports of construction materials.

Out of 18 sectors of the economy, 17 showed positive growth rates. The manufacturing sector showed signs of improvement with 2.3% growth, while services such as education (0.4%), health (4.1%), and real estate (3.1%) recorded moderate growth.

The NSO said that while the economy has continued its recovery trajectory since 2022/23, the growth remains modest due to various challenges. The report sites the impact of monsoon-related disasters and the construction sector’s underperformance as key factors limiting overall economic growth in the first quarter.