Published On: May 3, 2023 09:00 AM NPT By: Sajira Shrestha
NSO estimates growth rate to be four times less than government target
KATHMANDU, May 2: The economic growth rate of the country is expected to be almost four times lower than the government’s target in the current fiscal year, says the National Statistics Office (NSO).
In the current fiscal year (FY 2022/23), the government has set a target of 8 percent economic growth, but the NSO has projected that it will only be limited to just 2.16 percent. The World Bank and Asian Development Bank, Nepal's main donors, have projected the growth rate to stand at an average of 4.1 percent.
The size of Nepal's economy is estimated to have reached 5.38 trillion rupees in the current fiscal year 2022/23, according to the NSO. There are still two months left for the current fiscal year to end. The office estimates that the economic growth rate of Nepal in FY 2022/23 will reach 1.16 percent in consumer prices and 2.16 percent in basic prices.
The data prepared by NSO based on the actual calculation of the third quarter and the estimated economic activities of the fourth quarter showed an economic growth of 2.16 percent. “Due to the significant decline in the construction and mining sectors, the overall economic growth rate has been affected,” said NSO.
The preliminary estimate of the department is that the primary sector will contribute 24.6 percent to the current year's gross domestic product. This sector includes agriculture, forestry and fishery and mining and quarrying industries. Compared to the previous fiscal year (FY 2021/22), the gross value added (GVA) growth rate of this sector in the current fiscal year (FY 2022/23) is estimated to increase by 2.69% at constant prices. Despite the increase in the production of dry crops including paddy in the current year, the department said that there was no significant increase in the production of winter crops as well as milk, eggs and meat.
Similarly, it is estimated that the secondary sector will contribute 12.9% to the current fiscal year's gross domestic product. This sector includes industry, electricity, gas, steam and air conditioning supply services, water supply, sewage waste management and recycling activities and the construction sector. Compared to the previous fiscal year, the GVA growth rate of this sector in the current fiscal year is estimated to increase by 0.56 at constant prices. “Especially due to the decline in the industry and construction sectors, the gross value added (GVA) growth rate has decreased compared to last year,” the NSO stated.
Likewise, the service sector is estimated to contribute 62.4% to the current fiscal year's gross domestic product. This sector includes wholesale and retail trade, accommodation and food services, transportation and storage, information and communication, financial and insurance, real estate, professional and administrative professional services, public administration and defense, education, health and other services.
Compared to the previous fiscal year, the gross value added (GVA) growth rate of the sector in the current fiscal year is estimated to be 2.33% at constant prices. “Due to the decline in imports and domestic industrial products, there is a negative growth rate in wholesale and retail trade and low growth in transport and storage services. Therefore, the GVA of this sector has decreased compared to last year,” NSO stated.
Impact of various industrial sector in GDP
NSO has projected that the agricultural sector will contribute 24.12 percent while the non-agricultural sector will contribute 75.88 percent to the GDP of the current fiscal year. The preliminary estimate is that the GVA of the agricultural sector (agriculture, forestry and fishery) will increase by 2.73% in the current fiscal year but the non-agricultural sector will increase by only 1.92%.
In case of the construction sector, the activity of this sector has come to a standstill this year. It is estimated that the economic growth rate of this sector will be negative by 2.62 percent. According to the office, in the current fiscal year, there has been a slump in public and private construction works and there has been a decrease in the import of construction materials and domestic production. Due to this, the initial estimate of the office is that the economic growth rate will be negative. It is also estimated that this sector will contribute 5.52 percent to the total domestic product.
Similarly, NSO has projected that the manufacturing sector will contribute 5.32 percent to the GDP of the current fiscal year. “Due to the decline in production of vegetable, mustard, soybean and sunflower oils as well as iron and steel production, it is estimated that the gross value added (GVA) growth rate in the fiscal year will be negative by 2.04% compared to the last fiscal year,” the office stated.
Likewise, in the current fiscal year, the real estate business is expected to increase by 2.17 percent. Real estate transaction services mainly include land purchase and sale, leasing and providing services for other real estate transactions and housing services available from one's own home. It is also projected that this sector will contribute 8.37 percent to the total GDP in the current year.
The accommodation and food service sector will contribute 1.98 percent to the current fiscal year's GDP. According to the report of the NSO, the total value addition of this sector has improved compared to the previous fiscal year and is estimated to increase by 18.56 percent.
The report also states that the significant increase in the arrival of foreign tourists and the improvement in domestic tourism have had a positive effect on the value added growth rate of the tourism sector.
Per capita income of Nepalis projected to remain same for a year
This year, the per capita income of Nepalis will be US dollars 1,399, i.e. Rs 182,683. It was the same amount last year as well. The year before that, it was US dollars 1,277 .
Similarly, the NSO projects that the total national income per capita is estimated to reach Rs 184,140 or USD 1,410. The NSO estimates that remittances will be Rs 1.23 trillion this year. Along with this, it is estimated that the contribution of remittances to the total domestic product will be 22.89 percent.
Meanwhile, according to the data of Nepal Rastra Bank, remittances worth Rs 794.32 billion have been received in eight months. This year, the import of goods and services is estimated to reach Rs 1.96 trillion. This is 36.5 percent of the gross domestic product.
According to the data of the Department of Customs, goods and services worth more than Rs 1.2 trillion have been imported in nine months of the current fiscal year.
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