Nepal's economy slightly rebounds after entering a brief recession

Nepal's economy showed some signs of improvement after entering a brief recession, with the country's statistics department on Tuesday projecting a 2.16 per cent growth rate for the Himalayan nation.

Nepal plunged into its first recession in six decades as economic output continued to be weighed down by inflation and political instability.

However, the new data published by the National Accounts Statistics Division of the Nepal Government on Tuesday indicated some improvement as the country's economy is projected to witness a growth of 2.16 per cent towards the third and fourth quarters based on the basic price, according to Hem Raj Regmi, Deputy Chief at National Statistics Office of Nepal.

However, this growth is low as compared to last fiscal year's (2021-2022) revised estimated growth of 5.26 per cent and the previous year's (2020-2021) final estimate of 4.49 per cent.

The department on Tuesday published an annual estimate of the Gross Domestic Product, Gross National Product and associated Macro-economic indicators.

According to the analysis done by the National Statistics Office, the last two quarters of the Nepalese fiscal year have gone negative compared to the previous fiscal year's quarters, said Regmi.

According to international standards, if there are two consecutive negative growth in two quarters, then the country is known to have entered into a recession.

What we have observed in the past six months... both quarters have gone negative as compared to the previous quarters. With this basis, we can say that we had entered into a recession in the first two quarters.

The National Statistics Office has also made projections for the coming three months. The projection is based on the normal scenario.

The situation will be normal, there will be no more shock, he said.

The trend will continue particularly for the normal periods. Today we have projected that the Nepalese economy will grow by 2.16 per cent on a basic price and 1.8 per cent on consumers' price.

Nepalese fiscal year starts on Shrawan (July- August) and ends in Ashadh (June- July).

Three sectors, namely, manufacturing, construction and trade, showed negative growth in the current fiscal year, whereas the hotel industry and electricity showed some positive growth, according to Regmi.

However, other sectors such as education, health, agriculture, mining, real estate, IT etc showed negligible growth.

Among the three major industrial sectors, the contribution of the total industrial sector, referred to as the primary sector, is higher in the current fiscal year (2022-023)as compared to the previous year whereas the contributions made by the other two sectors known as secondary and tertiary sectors are lower as compared to the previous year.

The primary sector which includes agriculture, forest, fishing and mining has a 24.6 per cent contribution to the GDP, while the secondary sector comprising industry, electricity, construction and water supply, has a 12.9 per cent contribution in the current fiscal year's GDP.

Similarly, the tertiary sector comprising housing, real estate, wholesale and retail business, transport, communication, health, education etc has a 62.4 per cent contribution to the GDP.

According to Nepal Rastra Bank (the Central Bank), Nepal's inflation rate has increased to 6.32 per cent in the fiscal year 2022-2023 as compared to the previous fiscal year's 3.6 per cent.

In the fiscal year 2022-23, total exports increased by 41.7 per cent to Rs. 200 billion whereas total imports increased by 24.7 per cent to Rs. 1,920 billion. The country's trade deficit has reached Rs. 1,720 billion, which is 35.5 per cent of the GDP.