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🇳🇵 Nepal /Economy & Trade

Nepal's economy shrinks in third quarter, dampening rebound hopes

From Kathmandu Post · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Sources not specified Context piece
  • Nepal's economic growth slowed in the third quarter, with seven major sectors recording negative growth.
  • Weak government spending, sluggish production, and lower imports of machinery and construction materials contributed to the slowdown.
  • Annual growth is projected at 3.51 percent, a decrease from the previous year's 4.05 percent, indicating persistent economic weakness.

Nepal's economy is showing signs of weakness, with seven key sectors experiencing negative growth in the third quarter of the current fiscal year. The National Statistics Office reported that economic activity grew by only 0.58 percent compared to the previous quarter, a slowdown from the 0.92 percent growth seen in the same period last year.

The quarterly accounts show that expected improvements have not taken place in several sectors of the economy.

— Dhundi Raj LamichhaneDeputy chief statistician and spokesperson at the National Statistics Office, commenting on the economic data.

Factors contributing to this sluggish performance include weak government spending, particularly on construction and related industries, and a decline in imports of essential machinery and materials. While sectors like electricity generation, finance, and trade services provided some support, their growth was modest.

The fact that seven sectors recorded negative growth compared with the previous quarter, while growth in many of the sectors that remained positive was modest, indicates that economic activity has not improved.

— Dhundi Raj LamichhaneExplaining the implications of the third-quarter economic performance.

Economists generally favor year-on-year comparisons to assess economic health, but quarterly data offer insights into the direction of economic activity. The National Statistics Office spokesperson, Dhundi Raj Lamichhane, noted that expected improvements have not materialized in several sectors. "Although annual comparisons provide a clearer picture, both annual and quarterly indicators show weakness in several areas," he stated.

Although annual comparisons provide a clearer picture, both annual and quarterly indicators show weakness in several areas.

— Dhundi Raj LamichhaneFurther elaborating on the economic trends.

The overall annual growth projection for the current fiscal year stands at 3.51 percent, down from 4.05 percent in the previous fiscal year. This trend suggests that Nepal's economic recovery is facing significant headwinds, despite hopes for a rebound.

On one hand, government spending has not increased. On the other hand, imports of construction materials have declined significantly, affecting the construction sector.

— Dhundi Raj LamichhaneAttributing weak performance to government expenditure and import levels.
DistantNews Editorial

Originally published by Kathmandu Post in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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