Nepal’s construction sector made a strong recovery in the second quarter of the current fiscal year, growing by 9.1% compared to a contraction of 0.3% in the first quarter. The National Statistics Office (NSO) attributed this rebound to increased imports and higher domestic production of construction materials between mid-October and mid-January.
The sector had been struggling due to a prolonged economic slowdown, high construction material costs, and sluggish real estate activity. The previous two fiscal years saw limited growth of just 1.10% in 2022/23 and 2.07% in 2023/24, largely due to low government capital expenditure.
Economic Growth Trends
According to NSO estimates, Nepal’s overall economy expanded by 5.1% in Q2 FY 2024/25, with a seasonally adjusted GDP growth rate of 2.2%. Moderate expansion in education, housing, food services, and other service sectors contributed to the overall economic performance.
Key sectoral growth rates in Q2:
- Manufacturing: 7.4%
- Financial & Insurance: 6.6% (boosted by increased deposits and loans)
- Trade: 6.1%
- Information & Technology: 4.9%
Meanwhile, the agriculture sector, which remains Nepal’s largest economic contributor, is projected to grow by just 3.2%. Increased rice production, along with growth in vegetables, citrus fruits, winter fruits, and livestock, has positively impacted the sector’s overall value addition.
Growth Projections & Outlook
Nepal achieved an estimated growth rate of 3.87% in the last fiscal year. While the government has set an ambitious 6% growth target for the current fiscal year, the World Bank predicts that Nepal’s economic growth will hover around 4% in the coming years.
