Economic growth rate contracts to 3.4 percent in Q1: National Statistics Office

KATHMANDU: The Gross Domestic Product (GDP) growth rate has contracted to 3.4 per cent in the first quarter of the current fiscal year 2024/25, the National Statistics Office (NSO) said.

The economic growth rate has contracted due to the landslide and flooding occurred on September 27-29 and the negative growth in the construction sector.

The NSO said the government has set the target of 6 percent economic growth rate in the current fiscal year and only 3.4 per cent GDP growth rate has been achieved in the first quarter of the current fiscal year.

The growth rate of 17 out of the 18 various sectors contributing to the economy is in the positive while that of the construction sector is in the negative.

Among them, electricity and gas-related activities have the highest growth rate of 21.4 percent, while the transportation and storage sector are the second fastest-growing industrial sector with a growth rate of 6.7 per cent. Similarly, the value addition of the accommodation and food service activities sector is estimated to grow by 6.3 per cent.

According to the preliminary estimate, the growth rate of the financial and insurance sector will be 5.7 per cent, the growth rate of the administrative support service sector will be 5.4 percent and the growth rate of professional scientific and technical services will be 5.1 per cent in the current fiscal year.

It is estimated that the construction sector is shrinking slightly due to the decline in import of construction goods in the first quarter of the current fiscal year. The construction sector is negative by 0.3 per cent.

The value-added growth rate of the agriculture, forests and fishery sector, which share the largest space in the country’s economy, is estimated to be three per cent. There is a positive impact on total value addition of this sector following an increase in production of summer crops including paddy as well as vegetables, cash crops and poultry products, it is said.

Though agro products were expected to be increased following availability of chemical fertilizer, improved seed and sufficient monsoon rain, the total value-added growth rate of the agro sector could not increase sufficiently due to landslides and floods.

The wholesale and retail trade sector are estimated to grow by 0.5 per cent in the first quarter. According to the office, it is expected to increase the value-added growth rate of the industrial goods production sector by 2.3 per cent, education sector by 0.4 per cent, health sector by 4.1 per cent and real estate sector by 3.1 per cent during the review period.

Country’s overall economy is towards positive growth due to increase in agro-production, power production and distribution, and the flow of tourists, reads the report.