KATHMANDU, March 28: The construction sector of Nepal bounced back in the second quarter of the current fiscal year, with a growth of 9.1 percent compared to a negative 0.3 percent in the first three months of the FY 2024/25.
Unveiling a report on Wednesday, the National Statistics Office (NSO) estimated the revival of the construction sector that had been reeling under slump for a long time period. The NSO has attributed the growth in the sector to an increased import and surged domestic manufacturing of the construction materials during mid-October and mid-January this year.
With the standstill of the real estate business due to the prolonged economic slowdown and abnormal surge in prices of construction materials, the sector’s business of the country had largely been affected in the past few months. The sector witnessed a negative growth even in the past two fiscal years, which was attributed mainly to consistent low capital expenditure by the government. In the fiscal years 2022/23 and 2023/24, the construction sector's growth rates stood at 1.10 percent and 2.07 percent, respectively.
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According to the NSO’s estimates, the country’s economy grew by 5.1 percent in the second quarter of FY 2024/25. Considering the adjustment for seasonal effects, the GDP growth rate stood at 2.2 percent during the period. “Limited growth in education, housing, food services and other service sectors had kept overall economic growth moderate.”
Along with the notable rise in the construction sector, the manufacturing sector expanded by 7.4 percent. Likewise, the financial and insurance sector grew by 6.6 percent, driven by a surge in deposits and loans. The trade sector expanded 6.1 percent, while the information and technology sector grew 4.9 percent.
According to NSO’s preliminary estimates, the agriculture sector, which contributes the most to the national economy, is expected to grow by only 3.2 percent. The report states, "The increase in rice production, along with growth in vegetables, citrus fruits, winter fruits, and livestock products, has positively impacted the sector's overall value addition."
Nepal achieved estimated growth of 3.87 percent in the last fiscal year. The government has projected the growth rate of Nepal’s economy at six percent in the current FY. However, the World Bank in its recent report has estimated that the country’s economic growth will hover around four percent in the next few years.