Economic growth up, but misses govt’s 5pc target
KATHMANDU, JUL 14 -
The healthy growth in the agriculture and service sectors has pushed the country’s economic growth to 4.6 percent in the current fiscal year. The growth was 3.5 percent last fiscal year. The Economic Survey to be made public on Saturday shows economic growth in the fiscal year 2011-12 is, however, below the government target of 5 percent.
The growth in the agriculture and service sectors has made a positive impact on the overall economy, said a top official at the Finance Ministry. According to ministry sources, the survey has projected the agriculture sector’s growth at around 4.8 percent, thanks to a record food grain production. Nepal is expected to record an all-time high production of food grain of over 9.457 million tonnes in the fiscal 2011-12. With this, the contribution of the sector to the country’s GDP will increase to 35 percent this year, from the 33 percent last fiscal year. The agriculture sector’s growth in the last fiscal year was 4.1 percent. Likewise, the service sector that contributes 55 percent to the GDP is projected to grow by around 6 percent. However, the expansion of the manufacturing sector has been disappointing this year also. “The growth of the manufacturing sector would be above one percent,” said a source. Over the last five years, the growth of the industrial sector has remained at just 0.3 percent.
The statistics show that inflation rose moderately, compared to last year, although it is higher than what the government had targeted. The ministry sources said the survey projects inflation to remain at 8 percent, which is one percent higher than what the government had targeted. The government, in the current fiscal year’s budget, has targeted to control inflation at 7 percent. “The rise in the prices of petroleum products and bandas and strikes in April/May pushed the inflation higher,” said the source. The average inflation last year was 9.6 percent.
Two years ago, Nepal Rastra Bank reduced the weight of food items while measuring the inflation, which lowered the inflation level despite heavy rise in prices of food items. Of late, the prices of food and vegetables have sky-rocketed.Balance of payment and current account has, however, reached a record high. The current account surplus has crossed the Rs 60 billion mark. The current account surplus soared due to increased remittance and tourism income. Although the country has failed to attract substantial foreign direct investment, the rise in remittance and remittance income helped the country post a balance of payment (BoP) surplus of a record Rs 112 billion, according to the survey. The capital expenditure has surged in the latest two months of the fiscal year, although its growth was slow until the first 10 months of the fiscal year.
According to the Finance Ministry, capital expenditure stands at 90 percent, although there had been just 30 percent expenditure as of the first 10 months of this year. It means, the ministry had predicted that the total expenditure this year would be Rs 370 billion.
Posted on: 2012-07-14 08:16