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Kathmandu Thursday December 13, 2001 Marga 28, 2058.
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GDP growth
expected to tumble to lowest in 14 years
By Prem Khanal
KATHMANDU, Dec 12 – The
Nepali economy is expected to record the lowest Gross Domestic Product (GDP) growth in the
last 14 years, thanks mainly to dwindling agriculture, manufacturing and tourism revenues.
The preliminary estimates put
out by the Central Bureau of Statistics (CBS) for the current fiscal year puts GDP growth
at just 2.5 per cent, considerably lower than last year’s 4.95 per cent.
This is mainly because the
agricultural sector, which contributes around 40 per cent to the GDP and comprises 76.1
per cent economically active population, is likely to grow at only 2.10 percent.
Similarly, non-agriculture sector is also projected to expand at decelerating a rate of
2.76 per cent against a healthy growth rate of 5.6 per cent last year.
As a result, the CBS projects
that the per capita income of Nepalis will grow nominally. As per the estimate, the per
capita income is expected to grow by just 0.5 per cent to touch Rs 19,000 (about US $
250).
The saving and investment rates
are expected to register a slower growth rate due to the ballooning unemployment as a
result of less-than-expected performance of the agricultural and labour intensive
non-agricultural sector.
The CBS projection has also
lowered the last year’s estimated GDP growth, from the initial 5.8 per cent to only
4. 95 per cent. Poor performance of the non-agricultural sector, particularly in the last
quarter mainly due to Maoist-related violence dragged down the expected GDP growth.
The expected growth rate for the
current fiscal year, which is also the last year of Ninth Plan, is in line to become the
lowest GDP growth rate of the entire plan period. The Ninth Plan, which had set poverty
alleviation as the only objective, is certain to miss its targeted annual growth rate of 6
per cent. Now, the average growth rate during the plan period will remain at 4.3 per cent.
The budget for the current fiscal year has also expected the economy to grow at 6 per
cent.
On the nine sector-wise
performances of the GDP, hydropower, gas and water sector is expected to register a robust
growth of 27 per cent as opposed to 11 and 15 per cent during last and year before last
fiscal years. However, due to its low weight in the GDP, its sole in uplifting the growth
rate will be limited.
Similarly, the low growth rate
in the agricultural sector, which holds the heavy weight of 40 per cent, is mainly
attributed to unfavourable monsoon, especially in the eastern region. Among the major
monsoon crops, paddy is expected to register a negative growth rate, while the growth
forecast for millet and maize are also nominal.
Similarly, propelled by sharp
slowdown seen in the major exportable goods in recent months, manufacturing sector is
projected to slide down to just 2 per cent growth rate against 3.60 per cent and 7.20 per
achieved in the fiscal year 2000/01 and 1999/2000 respectively.
Likewise, the sharp decline in
the tourism sector has been clearly reflected in the remarkably low growth rate of just
0.40 per cent in trade, restaurant and hotels whereas such growths in the last two fiscal
years were 2.94 per cent and 6.8 per cent respectively.
On the other hand, the transport
and communication sector is forecasted to register a slow growth of by 4.30 per cent
mainly due to the shrinking industrial activities.
Similarly, finance and real
estate sector’s growth is expected to be around 4.5 per cent. The low growth rate of
finance sector is due to the continued excess liquidity condition of the banking sector
and continued sluggish poor performances of real-estate. Similarly, community and social
sector is also expected to surge by 1.2 per cent against 15.02 per cent recorded last
year.
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