KATHMANDU, Feb. 11 (Xinhua) -- Nepal's economy is likely to grow by just 3.5 percent in the current fiscal year 2025-26, far below the initial target of 6 percent, due to a slowdown across multiple sectors, the Ministry of Finance said on Tuesday.
Unveiling the mid-term review of the budget for the fiscal year that began in mid-July last year, the ministry said the growth rate would be limited to 3.5 percent because of a decline in paddy production, cultivated area and productivity, sluggishness in the construction sector, and a downturn in real estate transactions, among other factors.
"The targeted economic growth rate set in the budget is unlikely to be achieved," the mid-term review document said.
Last month, official preliminary production figures showed that paddy output may decline by 4.2 percent to 5.75 million tonnes, as the country witnessed a prolonged drought in southern Madhesh Province -- one of Nepal's major food baskets -- during the peak paddy transplantation period from June to July last year.
Nepal's construction and real estate sectors have also been struggling for the past few years and have yet to show a substantial recovery.
At a time when the economy has been struggling to rebound since the COVID-19 pandemic, unrest in September last year, which caused widespread destruction of public and private property, further weakened economic activity.
The World Bank projected last November that Nepal's economic growth would slow to 2.1 percent in fiscal year 2025-26, down from 4.6 percent in fiscal year 2024-25.
The World Bank attributed the projected slowdown to a potential downturn in the services sector in the post-unrest scenario. "Tourism activity is expected to decline sharply, reflecting a significant drop in international tourist arrivals, while the spillover effects of asset losses are likely to affect the insurance industry," it said. ■