Economic Activity Shows Positive Growth in Current Fiscal Year: NRB Report

Despite earlier projections of slower economic growth, Nepal Rastra Bank (NRB) has indicated that economic activity in Fiscal Year 2025/26 has increased compared to the previous year and is expected to grow above the average rate.

The central bank made the projection while releasing its Annual Economic Activity Study Report for FY 2024/25 (2081/82 BS).

According to the report, inflationary pressures in the country remained low in FY 2025/26 due to global declines in fuel and food prices, falling interest rates on loans and deposits, significant growth in hydropower production, increased foreign tourist arrivals, and rises in exports and remittances. In addition, construction and manufacturing sectors, which had been contracting in recent years, expanded due to NRB’s flexible monetary policy, contributing to above-average growth.

 “The economy has sufficient liquidity, and government efforts to promote good governance and initiative to prioritize projects by chanelling budget from stalled and underperforming small projects are expected to further stimulate economic activity,” the report said.

Preliminary estimates from the Central Bureau of Statistics indicate that Nepal’s economic growth in FY 2024/25 stood at 4.6% in consumer prices and 4% at current prices. The contributions of agriculture, industry, and service sectors to GDP were 25.2%, 12.8%, and 62%, respectively.

Regionally, Bagamati Province accounted for the largest share of GDP at 36.5%, followed by Koshi Province at 15.9%, while Karnali had the smallest share at 4.2%.

In agriculture, major crop production rose 3.7%, although the area under cultivation decreased by 2.2%. Vegetable output increased 10.1%, spice production grew 0.7%, and fruit production declined 3.3%. Among livestock products, milk output fell 1%, meat 0.3%, and eggs increased 1%. Forestry products showed growth, with timber up 8.82%, while medicinal plants declined 1.91%.

Industrial sector capacity utilization averaged 44.5%, down from 48.3% in FY 2023/24. By mid-July 2025, industrial loans accounted for 30.42% of total loans disbursed by banks and financial institutions.

Tourism also showed positive signs, with foreign tourist arrivals rising 1.7% to 1,147,834. Conversely, house plan approvals fell 1.2%, and revenue from land registration dropped 18.6%. Total deposits with banks and financial institutions increased 12.5%, while loans rose 8.2% compared to mid-July 2024.

The report noted that the average loan-to-deposit ratio stood at 76.6%, with Bagamati Province holding the largest share of both deposits and loans — 65.8% of total deposits and 59.5% of total loans. -- RSS