The country’s economy is projected to grow by 6.81 percent in 2018-19, which is a little short of the government target of 8 percent growth for the current fiscal year, but still one of the best growth rates in recent years.

This is the first time the country is seeing a growth rate of over six percent three years in a row since 2000, according to the Central Bureau of Statistics, which unveiled the National Account Statistics on Friday.

In the fiscal year 2016-17, the country’s economy—or the Gross Domestic Product (GDP)—expanded by 7.74 percent, the highest growth since the fiscal year 1993-94, when the economy had expanded by 8.2 percent, as per a revised estimate. The economy grew by 6.3 percent in the following year 2017-18, according to the bureau.

While the growth of 6.8 percent itself appears impressive considering the meagre growth in earlier years of the last decade, it still falls short of the target of the incumbent KP Sharma Oli administration, which has made “Prosperous Nepal” its slogan targeting a consistent double-digit economic growth.

The government has described the current fiscal as the foundation year for economic prosperity when the economy would grow close to 10 percent and double digit in five years. The approach paper of the 15th plan (2019-20 to 2023-24), recently endorsed by the National Development Council, has set the target of an average annual growth of 10.1 percent during the period.

But former Vice-chairman of National Planning Commission Swarnim Wagle told the Post that the expected economic growth of 6.81 percent this fiscal was possible due to continuation of past activities and good climatic conditions, instead of the government’s new initiatives.

“Growth in key sectors of economy such as agriculture, transport and communication, manufacturing, and electricity and water was not due to the government’s policy initiatives,” he told the Post. “Good climatic conditions helped agriculture sector’s growth. Ongoing activities of the private sector contributed to the electricity sector. The growth rate in the manufacturing sector has gone down and transport and communication sectors’ growth is due to the contribution of remittance.”

He said that the growth rate in various sectors of the economy showed no sign of structural transformation in economy. “It will be even more difficult for the government to achieve higher growth in the upcoming years because of higher base for the growth,” he added.

According to the bureau, growth of the current fiscal year is basically driven by the agriculture sector, also known as the primary sector, whose growth rate is expected to remain at 5.1 percent this fiscal year owing to good climate, compared to 2.72 percent growth last fiscal year.

The sector contributes 26.5 percent to the national economy. Nepal has witnessed a record harvest of paddy, the largest contributor from the agriculture sector, with production as high as 5.6 million tonnes this fiscal year, according to the Ministry of Agriculture and Livestock Development.

“The agriculture sector is estimated to grow due to the growth in production of paddy, vegetables, wheat, maize and potato,” the CBS states in its report. “The commercialisation of agriculture, availability of fertilisers and seeds and irrigation facility along with good climate also helped this sector to grow.”

Although growth rate of the secondary sector represented by manufacturing, construction, electricity and water saw growth less than the growth of last fiscal year, it still remained impressive, according to the bureau.

According to the bureau, the secondary sector is expected to grow by 8.1 percent against the growth rate of 9.62 percent. But, the tertiary sector, also known as the service sector represented by wholesale and retail, hotel and restaurant, financial intermediary, real estate, health, education, public

administration and social and personal services, is expected to see an impressive growth of 7.29 percent against the growth of 7.17 percent last fiscal year.

The expansion of energy sector, intensity of reconstruction and other construction works and growth of industrial sector resulted in an impressive growth in secondary sector, the CBS said.

Particularly, the rise in power generation has contributed to the growth in this sector as 22 megawatt electricity was added to the national grid this fiscal year and domestic output is expected to rise due to rainfall in March and April.

But, within the secondary sector, the growth rate of the manufacturing industries has come down drastically to 5.78 percent compared to 9.17 percent growth last fiscal,  according to the statistics bureau.

This, according to Ganesh Acharya, director of the bureau, is due to less production of bricks and timber because of rainfall and other factors.  

But, industrialists are still encouraged by the current business climate of the country, aided by political stability, availability of electricity and the government’s commitment to economic growth and prosperity.

“Business climate in the country is improving and the growth of the industrial sector is good,” said Hari Bhakta Sharma, former president of Confederation of Nepalese Industries.

“The contribution of the manufacturing sector could have been improved provided that there was no liquidity crunch in the banking sector in recent months and the government had been able to spend the capital budget well.”

According to him, the government is an important consumer of the industrial materials such as cement, steel, electricity and information technology products. When it comes to service sector, there has been good growth in the trading of goods due to good production within country and rise in imports, according to the bureau.

Due to the rise in tourist arrivals and better electricity supply, there has been significant growth in hotel, restaurant, transport and communication sectors, the CBS said.