Kathmandu-The government has projected that the country’s economic growth rate will be limited to 3.5 percent. The projection was made in the mid-year review of the current fiscal year’s budget.

The annual growth rate of Gross Domestic Product (GDP) for the current fiscal year was initially estimated at six percent. However, the new projection in the mid-year review has lowered the growth rate to 3.5 percent due to a decline in paddy production, reduction in cultivated area and productivity, slowdown in the construction sector, and a drop in real estate transactions. In the last fiscal year, the GDP growth rate was estimated at 4.6 percent.

According to the mid-year budget evaluation report, GDP at basic prices is estimated to have grown by three percent in the first quarter of the current fiscal year. In the same period of the previous fiscal year, GDP at basic prices had grown by a revised estimate of 2.9 percent.

During the first quarter of the current fiscal year, the total value added of the agricultural sector is estimated to expand by 1.36 percent compared to the same period of the previous fiscal year.

The overall growth rate of value added in agriculture is expected to remain comparatively low, mainly due to a decline in paddy production, although output of livestock, vegetables, and fruits is projected to increase.

Production of food crops such as maize, millet, and buckwheat is expected to increase in the current fiscal year. In the previous fiscal year, production of food crops including paddy, wheat, and maize increased by 2.67 percent, while cash crop production increased by 2.01 percent.

In the first quarter of the current fiscal year, the total value added of the industrial sector is estimated to expand by 5.44 percent compared to the same period of the previous fiscal year.

Expansion in energy and construction activities is expected to have a positive impact on the overall industrial sector. The value added of manufacturing industries is estimated to grow by 1.52 percent during the first quarter of the current fiscal year.

During the same period, the total value added of the service sector is estimated to expand by 3.03 percent compared to the same period of the previous fiscal year. Expansion in wholesale and retail trade, financial intermediation, public administration and defense, tourism activities, and personal services is expected to positively impact the overall service sector.

According to the mid-term budget review report, the average inflation rate during the first six months of the current fiscal year stood at 1.7 percent, compared to 4.97 percent in the same period of the previous year.