Economy to grow by 2.27% this year, PCI to reach $1085

Kathmandu, Apr. 29

The government has projected that the economy of the country will expand by just 2.27 per cent this year breaking the high growth trajectory of above 6 per cent for the last three consecutive years.

"Severe impact of the coronavirus pandemic in major economic sectors and internal and external measures applied to check the spread of the virus will have repercussion in the growth of the Gross Domestic Product (GDP) of the country," said the Central Bureau of Statistics (CBS).

The statistical body under the National Planning Commission has prepared the growth estimates based on the first seven to nine months of the current fiscal year 2019/20.

"The economy will grow by 2.27 per cent at the constant price in the current FY, however, the estimates were made on the basis of the impacts of the pandemic on hotel, restaurants and international transportation since the situation in the recent future is unknown," said the CBS. But it said it was hopeful that the other economic sectors would revive gradually from mid-May.

This growth is the lowest since FY 2015/16 when the economy reached the lowest ebb of 0.01 per cent in the recent times due to the devastating 2015 Gorkha earthquake and the Indian blockade in 2015 and 2016.

In the last fiscal 2018/19, the economy grew by 6.75 per cent and in 2017/18 by 6.35 per cent.

Growth rate of all three economic sectors is projected to shrink by more than half while the tertiary sector will nosedive as it was the first sector to be affected by the pandemic.

The primary sector, secondary and tertiary sector are estimated to grow by 2.5 per cent, 3.36 per cent and 1.99 per cent respectively this year against the growth of 5.1 per cent 8.1 per cent and 7.29 per cent in the last fiscal.

Primary sector includes agriculture, forest, fishery, mines and excavation. It is largely based on the production of rice which is reduced by 1 per cent compared to last year's 9 per cent growth. Likewise, the obstruction created by the lockdown will also disturb the growth of this sector, said CBS.

Secondary sector includes industries like construction, manufacturing, energy and water. Most of the industries except for a few essential good producers are completely halted since the implementation of lockdown on March 24.

Tertiary sector comprises of service businesses like wholesale and retail trade, hotel, restaurant, transportation, financial intermediaries and real estate.

The share of the agriculture, industry and service sectors will be 28.20 per cent, 13.72 per cent and 58.08 per cent respectively.

The GDP in consumer price is Rs. 3767 billion.

Hotels are hit hard

According to the CBS, hotels and restaurants are the most hit sectors among all as they are estimated to witness a loss of 16.30 per cent compared to the growth of 11.06 per cent last year.

Other sub-sectors that are expected to catch negative growth are transport, storage and communications, construction and manufacturing.

However, electricity, gas and water subsectors will grow by 28.75 per cent. Health and social work, fishing, and public administration and defence will see better growth, higher than previous year.

PCI $1,085

The per capita income (PCI) of Nepali citizen is estimated to reach US$ 1,085 (Rs. 126,018) in the current fiscal year.

Current PCI stands at $1,032.

The NPC has projected that the PCI will reach $3,222 (at the current exchange rate) before 2030 – the year when Nepal will be a middle-income country from the developing one.

Likewise, the gross fixed capital formation is Rs. 1060 billion.

Remittance is Rs. 716 billion with 19.01 per cent ratio to the GDP.

Annual growth rate of major economic activities (in per cent)

Category	2017/18	2018/19	2019/20
Agriculture and forestry	2.72	5.05	2.48
Mining and quarrying	8.88	8.91	-0.69
Manufacturing	9.17	6.82	-2.27
Electricity, gas and water	9.64	9.15	28.75
Construction	10.02	8.05	-0.31
Wholesale and retail trade	12.54	11.06	2.11
Hotels and restaurants	9.77	7.33	-16.30
Transport/storage & communication	4.65	5.90	-2.45
Financial intermediation	6.38	6.18	5.15
Real estate and renting	5.24	6.12	3.25
Education	5.02	5.11	4.88
Health and social work	6.33	6.75	7.07

Source: CBS.

Published in The Rising Nepal daily on 30 April 2020.