Nepal’s economy expanded by 3.51% in the third quarter of the current fiscal year 2025-26, a decrease from the 4.05% growth in the same period last fiscal year, as reported by Nepal’s National Statistics Office (NSO). The country has been facing challenges in recovering from a period of low economic growth exacerbated by the Covid-19 pandemic and ongoing political instability.
The NSO’s preliminary estimates indicate that 16 out of 18 economic sectors in Nepal are expected to show positive growth during this period. However, the manufacturing sector and public administration and defence are projected to experience negative growth.
Nepal’s manufacturing sector, which had shown signs of recovery in the previous fiscal year, slipped back into negative growth in the current fiscal year’s third quarter. Factors such as the US-Iran war and increased transportation costs due to higher oil prices have impacted industries like plastics, pipes, and construction materials.
According to the NSO, the growth in the third quarter was primarily driven by higher electricity generation, increased deposit mobilization, credit disbursement, non-life insurance premium collections, and the expansion of the wholesale and retail trade sector. However, the overall growth rate was moderated by reduced imports of construction materials, lower paddy production, and decreased domestic output of certain commodities compared to the previous fiscal year.
Nepal’s agriculture sector grew by 1.58% in the third quarter, down from 2.84% in the previous fiscal year, with a decline in paddy production but modest growth in livestock, poultry, vegetables, fruits, and forestry products. The wholesale and retail trade sector expanded by 5.25%, driven by increased domestic production and imports of tradable goods.
