Macroeconomic Update Nepal

Abstract

Gross domestic product (GDP) growth edged down to an estimated 6.3% in fiscal year 2018 (FY2018, ended 16 July 2018) from 7.9% in fiscal year 2017 that accelerated from a low base (Figure 1). Floods of August 2017 crimped paddy production by 1.5% compared to the previous year. Manufacturing grew by 8.0%, though down from 9.7% a year earlier, on increased availability of electricity. Construction grew at a sustained pace with the sub-sector taking off at sub-national levels and the renewed acceleration of post-earthquake reconstruction. Several small sized hydropower projects commenced operation, raising the installed electricity capacity by 10.5% in FY2018 (Figure 2). Tourists’ arrival (Figure 3) increased favoring the expansion of hotels and restaurants and travel and communication services as the economy recovered from the 2015 earthquakes and the September 2015 –February 2016 trade and supply disruptions, further bolstered by the prospects of a more stable socio-political environment.