Nepal’s gross domestic product (GDP) at basic prices is expected to grow at the rate of 5.89 percent to reach Rs3 trillion this fiscal year ending mid-July, the Central Bureau of Statistics (CBS) said Wednesday.

This is the second highest growth rate achieved by the country in the last 10 years. Meanwhile, the CBS has revised last year’s economic growth rate upward to 7.39 percent from 6.94 percent.

With a GDP worth Rs3 trillion, the per capita income of Nepalis will reach Rs103,335 ($1,004), based on an estimated population of 29.10 million. In the last fiscal year, Nepal had a per capita income of Rs92,031 ($866). Releasing the preliminary annual National Accounts Statistics of Nepal 2017-18, CBS Director General Suman Raj Aryal said that the outlook remained largely positive, driven by robust construction activities and growth in service sectors like transportation, information technology and tourism, although the agriculture sector did not perform as expected.

“The construction of hydropower plants, roads, airports and hotels boosted the quarry and mining sector. It has also created domestic demand leading to robust construction activities,” he said. The construction sector is expected to expand by 10.64 percent while the quarry and mining sector is expected to achieve a growth of 10.46 percent.

The country is expected to add 82 MW to the central grid during this fiscal year, leading to a growth of 5.82 percent in the electricity, gas and water sector. Likewise, the hotel and restaurant sector is expected to witness the strongest growth of 9.77 percent, a rise of more than 2.44 percentage points compared to the last fiscal year. 

“However, there have been no significant changes in the key livestock and agriculture sector this fiscal year as we still depend on a rain-fed farming system,” said Aryal.

Paddy production this fiscal year has been expected to total 5.1 million tonnes, down 1.5 percent from the previous year. The August floods had been expected to hit paddy production hard, but there was less damage than anticipated. Paddy alone accounts for 20.7 percent of the country’s agricultural output. Overall, the agriculture sector is expected to inch up 2.72 percent this fiscal year due to the August floods that led to a drop in paddy output.

Nepal’s economic growth rate tumbled to 0.2 percent in 2015-16 after the country was knocked to the ground by a 7.8 magnitude earthquake in April 2015 and a trade embargo by India from September 2015 to February 2016.

The embargo cut off supplies of everything from daily essentials to raw materials and petroleum products. This sent the economy into a tailspin, and the country suffered its worst growth rate of 0.02 percent since fiscal 1982-83.

In the last fiscal year, the country achieved a 23-year-high economic growth rate of 7.39 percent on the back of a good monsoon that boosted agricultural output. Nepal’s farm sector registered a nine-year-high growth rate of 5.23 percent. The contribution of the agricultural sector to the GDP this fiscal year is expected to drop to 27.1 percent from 28.2 percent recorded in the last fiscal year.