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Nepal's economic growth expected to be lowest in 14 years

Xinhua, May 3, 2016 Adjust font size:

Nepal's economy will grow by 0.77 percent this year as a result of recent blockade in southern border points and slowed reconstruction activities, said Central Bureau of Statistics (CBS), Nepal's main government body to make economic projection.

It will be the lowest growth in the last 14 years, if the current prediction materialized.

Earlier, Nepal's economy had expanded by meager 0.16 percent in the fiscal year 2001-02 when the Himalayan country was going through a bloody civil war.

International agencies such as International Monetary Fund, the World Bank and Asian Development Bank have projected the growth in Nepal in the range of 0.5 percent to 1.7 percent.

Among the three key sectors of the economy, agriculture and service sector are expected to grow meagerly while industrial sector will contract, according to the CBS.

The country's primary sector which contributes 32.28 percent to gross domestic product (GDP) and includes agriculture and forestry, fisheries and mining and quarrying is predicted to grow by 1.22 percent.

The earthquake, natural calamities and drought affected the growth of this sector, the report said.

The CBS has predicted the secondary sector contributing 13.43 percent to GDP to contract by 6.3 percent. It includes manufacturing industries, electricity and construction.

Similarly, the tertiary which contributes 54.29 percent to GDP and includes service sectors like wholesale and retail trade, hotels and restaurants, transport, storage and communication and financial intermediaries, among others, is projected to expand by 2.67 percent.

Govinda Nepal, chief economic advisory to Nepal's Finance Ministry said that the shortage of the fertilizer during the blockade and ongoing drought affected the agriculture sector's growth this fiscal year.

"Industrial sector suffered due to unrest in southern Tarai as well as absence of raw materials and electricity during the blockade," said Govinda Nepal, adding that suffering of industrial sector also affected the growth of service sector such as banking and retail."

As drought continues and the dissatisfied political parties in southern Tarai are threatening to start another round of protest, there is risk that economic growth could be downward further. Endit