After two years of subdued economic performance, Nepal’s economy is on track to grow by 4.61 percent in FY 2024/25, according to the National Statistics Office (NSO). The figure reflects a continued recovery but falls significantly short of the government’s 6 percent growth target.

The NSO unveiled the data on Wednesday, showing that the economy continues to rebound from the cumulative impacts of the COVID-19 pandemic, major natural disasters—including the Jajarkot earthquake—and ongoing domestic and global challenges.

The projected growth of 4.61 percent, calculated at consumer prices, slightly surpasses the forecasts made by the Asian Development Bank (4.4 percent) and the World Bank (4.5 percent). However, at basic prices, the growth rate is estimated to remain modest at 3.99 percent.

According to the NSO, Nepal’s gross domestic product (GDP) is estimated to expand to Rs 6,107 billion by the end of FY 2024/25, up from Rs 5,709 billion in FY 2023/24.

Chief Statistical Officer Madhusudhan Burlakoti highlighted that the recovery is being driven by improved performance across key sectors, despite earlier disruptions caused by health crises and climate-induced disasters. NSO Director Rishiran Sigdel noted that all 18 economic indicators monitored by the office have shown improvements.

Sector-wise, the agricultural sector is projected to grow by only 3.28 percent, slightly below the 3.35 percent recorded in the previous fiscal year, signaling a modest slowdown. In contrast, the non-agricultural sector is expected to expand by 4.28 percent, improving on last year’s 3.36 percent growth. Within this category, the primary sector is projected to grow by 3.25 percent, the secondary sector by 4.65 percent, and the services sector by 4.21 percent.

Leading the recovery is the electricity and gas sector, which is expected to grow by an impressive 13.82 percent—the highest among all sectors. Sectors that recorded negative growth last year, such as industry, which shrank by 2.02 percent, and construction, which contracted by 2.20 percent, are both projected to return to positive territory. Industry is expected to grow by 3.78 percent, and construction by 2.21 percent in FY 2024/25.

Nepal’s per capita gross national income (GNI) is projected to increase to US$ 1,517 in FY 2024/25, up from the revised estimate of US$ 1,467 in the previous year.

Despite the positive trajectory, economists remain cautious. The current pace of recovery, while better than previous years, underscores the structural challenges that continue to hinder Nepal’s ability to achieve high and sustained growth.

Economist Keshav Acharya observed that although there have been improvements in some economic indicators, they are insufficient for a true economic transformation. “The country requires massive economic improvement,” he said, adding, “The government’s development expenditure is still weak, and the construction sector has not been revitalized as expected. The government must put extra efforts to increase capital expenditure.”

(Updated news with quotes)