GDP growth to slump to 8-yr low

- PRITHVI MAN SHRESTHA, Kathmandu

Jun 8, 2015-

The country’s economic growth is projected to slump to an eight-year low due to the devastating April 25 quake and poor monsoon. The government on Monday scaled back GDP growth forecasts, with the Central Bureau of Statistics (CBS) putting it at 3.04 percent for the current fiscal.  

Having revised the GDP growth projection to 5 percent from the targeted 6 percent due to poor monsoon, the April 25 quake and aftershocks forced the government to further cut growth forecasts.

Making public the revised estimate on Monday, the CBS said it was scheduled to announce the growth projection at 4.58 percent a day before the Great Earthquake but had to postpone and accommodate the factors in the wake of the disaster. This is the slowest annual growth since fiscal year 2006-07 when the country’s GDP grew by 2.75 percent.

“The growth of just 3 percent is disappointing but it is not unexpected,” said Swarnim Wagle, a member of the National Planning Commission (NPC), at a press meet organised by the CBS on Monday. 

“The decline of GDP by around 1.5 percentage point in the economic activities of less than three months suggests a huge impact on the economy.” 

Wagle added that the quake has hit the government’s plan of leading the economy at higher growth trajectory, starting from five percent this fiscal.

The CBS has made downward revision of almost all sectors following the quake in comparison to its pre-quake projection. Construction, real-estate, hotel and restaurants, agriculture, mining, manufacturing, financial 

sector and education are among the worst-hit sectors.  Wholesale and retail, fishery, transportation and electricity will also see a downward curve.

The realty sector is expected to grow by just 0.77 percent against anticipated 4.86 percent due to downturn in real estate transactions and residential facilities in the wake of the disaster.

With massive downfall in the number of internal and foreign tourists and damages to infrastructure, the hotel and restaurant sector is expected see its growth dip to 3.98 percent from 6.6 percent anticipated before the quake. 

The manufacturing sector is also expected to see a growth of just 2.35 percent against the projection of 4.55 percent due to damages to some industries, lack of manpower and low demands of industrial goods.

The CBS said the latest GDP growth projection is based on the assessment of the earthquake induced damages as per Post Disaster Need Assessment (PDNA) guidelines developed by the United Nations and other international institutions.

Making a presentation about impact of the quake on economy, CBS Deputy Director General Suman Raj Aryal said that the country is expected to incur a loss of production of goods and services worth Rs52 billion in just 83 days after the quake. 

The expenditure in inputs to produce goods and services is expected to decline by Rs 20 billion and the gross domestic product by Rs 36 billion against the projection before the earthquake, according to the CBS. 

The health and social services are the only sectors that will see growth, while the growth projection for public administration and defence has been kept unchanged as the government is expected to maintain salaries and facilities at the current level.

“The secondary setback in economy has not yet been anticipated following the quake, such as default of loans that went to residential housing and real estate services as well as its impact on the insurance sector forcing insurers to make payment beyond their capacity,” said Wagle. 

The impact of the quake has already been seen in revenue collection as the Finance Ministry projected a maximum revenue collection this year at Rs 390 billion against the target of Rs 422 billion. 

The slowdown in growth has come as a great setback to country’s plan of graduating to a developing country by 2022 from the current least developed status. 

“The country didn’t have chance to meet to pre-capital income for graduation before the earthquake,” said NPC Vice-chairman Govinda Raj Pokharel.

“The impact of the quake on the economy has further damaged the prospect of increasing income of people.”

He said that it had even added challenges to sustain achievements made in the health and education sectors where Nepal has excelled in meeting almost all human development indicators for graduation. 

 

Nepalis set to lose $24 per capita

KATHMANDU: Nepalis stand to lose $24 in per capita income this fiscal year due to profoundly negative consequences brought along by the Great Earthquake, according to the latest CBS growth projection. 

Per-capital income growth this year has been downgraded to 6.52 percent at $762 from 9.82 percent ($785) projected before the quake.

Although the per-capital income is still higher than last year’s $717, the quake has caused reduction in income of the people, the CBS said. (PR)

Published: 09-06-2015 08:05

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