Kathmandu. The government has projected that the country’s economic growth rate will be limited to 3.5 percent. This projection was made in the half-yearly review of the budget for the current fiscal year.

The GDP growth rate in the current fiscal year was estimated to be six percent. However, the new half-yearly review has projected that the economic growth rate will slow down to 3.5 percent due to the decline in rice production, area and productivity, sluggishness in the construction sector and the decline in real estate transactions. In the last fiscal year, the GDP growth rate was estimated to be 4.6 percent.

According to the half-yearly evaluation report of the budget, the Gross Domestic Product (GDP) has increased by three percent in basic prices in the first quarter of the current fiscal year. Such growth in basic prices of Gross Domestic Product (GDP) in the same period of the last fiscal year was revised to 2.9 percent.

In the first quarter of the current fiscal year, the total value added in the agriculture sector increased by 1.5 percent compared to the same period of the previous fiscal year. It is expected to expand by 36 percent. The growth rate of total value added in the agriculture sector is expected to be relatively low especially on the basis of the expectation of decrease in rice production and increase in the production of livestock, vegetable crops and fruits. However, the production of maize, millet, buckwheat and other food crops is expected to increase in the current fiscal year. The production of cereal crops including paddy, wheat and maize has increased by 2.67 percent while the production of cash crops has increased by 2.01 percent in the last fiscal year.

The overall value added (GV) of the industrial sector is estimated to increase by 5.44 percent in the first quarter of the current fiscal year as compared to the corresponding period of the previous fiscal year. The expansion in activities in the energy and construction sectors in the current fiscal year is expected to have a positive impact on the entire industry. The total value added of the manufacturing industries is estimated to increase by 1.52 percent in the first quarter of the current fiscal year.

In the same period, the total value of the service sector increased by 3.5 percent compared to the same period last year. It is expected to expand by 03 percent. Expansion in wholesale and retail trade, financial intermediation, general administration and defense, tourism activities and personal service activities is expected to have positive impact on the overall service sector in the current fiscal year.

According to the Budget Mid-Term Review Report, the average inflation in the first six months of the current fiscal year is 1.7 percent. In the corresponding period of the previous year, inflation was 4.97 percent.