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The national economy posted a modest year-on-year expansion in the first three months of fiscal year 2025/26, even as quarter-on-quarter indicators point to a contraction, according to the National Accounts Estimates released by the Nepal Statistics Office (NSO).

Based on seasonally unadjusted data—figures that are not corrected for seasonal patterns such as festivals or harvest cycles, the Gross Domestic Product (GDP) at basic prices grew by 3.02 percent in the first quarter of 2025/26 compared to the same period of the previous fiscal year. 

The year-on-year growth, however, remained relatively subdued due to contraction in several production-related activities, including food grain crops, forestry products, life insurance services, and domestically produced construction materials. Despite these pressures, growth in electricity generation and distribution, financial activities, livestock production, fruits and vegetables, trade services, and tourism inflows helped keep overall GDP growth in positive territory.

According to the NSO, estimates of seasonally unadjusted quarterly GDP are first produced on the basis of indicators related to various economic activities. Estimates of seasonally adjusted quarterly GDP are then prepared using the X-12 ARIMA method introduced by the International Monetary Fund (IMF). Quarterly growth rates are calculated based on these estimates, according to the NSO, it added.

According to the estimates, all 18 industrial classifications recorded positive growth on a year-on-year basis during the quarter. This indicates a broad-based but moderate recovery when compared with the first quarter of 2024/25.

In contrast, seasonally adjusted data show that the economy contracted by 1.68 percent in the first quarter of 2025/26 compared to the fourth quarter of 2024/25. According to the NSO, this contraction reflects negative growth in 13 out of 18 industrial sectors, which outweighed modest expansion in the remaining sectors.

Among sectoral performances on a year-on-year basis based on seasonally unadjusted data, the electricity and gas sector recorded the highest growth at 14.91 percent, supported by increased power generation and distribution. This was followed by financial and insurance activities, which grew by 7.07 percent, and professional, scientific and technical services, which expanded by 5.52 percent.

The agriculture, forestry and fisheries sector—the single largest contributor to the economy—posted a growth rate of 1.36 percent. Although paddy production declined during the period, modest increases in livestock, vegetable, and fruit production helped keep overall agricultural value added in positive territory.

Wholesale and retail trade; repair of motor vehicles & motorcycles, the second-largest sector, was estimated to have grown by 3.89 percent year-on-year, driven by growth in domestic production of tradable goods as well as higher imports. On the lower end of the spectrum, water supply, sewerage and waste management activities recorded the weakest growth at 1.11 percent, followed closely by human health and social work activities at 1.19 percent.

Seasonally adjusted quarter-on-quarter data present a more challenging picture. During the review period, only five sectors registered positive growth, while the remaining 13 sectors experienced contraction. The electricity and gas sector again stood out with a 4.95 percent growth compared to the previous quarter.

The agriculture, forestry and fisheries sector, however, contracted by 1.65 percent . Mining and quarrying saw the sharpest decline at 10.05 percent, followed by public administration, defense and compulsory social security-related activities, which shrank by 5.95 percent.

The NSO said the negative quarter-on-quarter performance largely explains the overall contraction in seasonally adjusted GDP during the first quarter, even though year-on-year indicators remain positive.

The price of gold has increased by Rs 700 per tola in the domestic market on Friday. 

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 277, 200 per tola today. It was traded at Rs 276, 500 per tola on Thursday. 

Similarly, the price of silver has increased by Rs 160 and is being traded at Rs 5, 645 per tola today.

These days, two questions are so prominent regarding the socio economic development of Nepal. First, how can the good policies practiced by various successful countries be implemented to strengthen the internal economy? And second is why the development efforts failed to attract youth in the mainstream? To find the answers, we need to identify the way of achieving fruitful results according to the new generation’s desires. In the context, about the status of socio-economic development, currently, we can find three types of opinions. 

The first view claims that the country has made significant progress from a socio-economic perspective. The second logic is negative that denies the first view.  This logic did not see any adequate space for the future development of youth and the coming generation. The third view is mixed; and it compares the economic and social progress between past and present period and argues that some results have been achieved but it is not enough in comparison to other countries including neighbors; not enough as the demand and desire of the conscious people including new generation. This view is more realistic and fair since it shows the picture of yesterday's work, progress, and results as well as shortcomings and inadequacies of the past period. Therefore, to draw concrete conclusions, it will be better to divide Nepal’s development into different time periods.

Until 1956, the length of motorable roads in the urban areas of Nepal, basically in Kathmandu, Birgunj, and Biratnagar was 500 kilometers, out of that only half could be used throughout the year. There were two railways, Raxaul-Amlekhgunj and Jayanagar-Bijalpura, 130 kilometers long in aggregate. A ropeway of 67 kilometers was in operation from Bhimphedi to Kathmandu. There were two small canals named Chandranahar (Saptari) and Juddhanahar (Sarlahi) for irrigation purposes built by the government. Total hydro electricity generated was 3100 KW. In terms of health, there was Bir Hospital and Naradevi Ayurveda Hospital only. At that time, there were only four dozen high level educational institutions including Durbar High School and Trichandra College. The number of primary schools was near about four hundred. The literacy rate was below five percent. 

Even until the mid-decade of 1963, the development of physical infrastructures was less than a dozen. At the national level, the Tribhuvan Highway, Arani Highway, Prithvi and Siddhartha Highways were in operation but Raxaul-Amleshgunj railway was already closed. There was no electricity except in cities such as Kathmandu, Birgunj, Biratnagar and Bhairahawa. Until the 1970s too, Indian land had to be used to reach many parts of Nepal. By 1990 too, the length of the road, irrigated area of land and power generation capacity were 7,000 kilometers, 493,000 hectares and 238 MW respectively. The total number of schools was 2,1826 and the health institutions reached 1,100. During this period, the literacy rate reached 30 percent and the average age reached 55 years.

By the middle of July 2024, the length of the road reached 36,000 kilometers, the area of irrigated land was registered to 1.6m hectares and the renewable energy (electricity) capacity had increased by 14 times and recorded to 3,336 MW. In terms of social infrastructure, the number of schools and health institutions are 35,447 and 8,746 respectively. Now, the literacy rate is 77 percent and the average life expectancy rate is 71 years. The number of people below the poverty line has decreased to 20 percent, which was 49 percent in 1990. However, this poverty rate is the highest among South Asian countries. 

In this way, during the three and a half decades after 1990, in terms of numbers, Nepal has made significant progress in the areas of physical and social infrastructures but the achievement is not satisfactory in terms of quality and adequacy. Because of the total roads in terms of transportation, the percentage of black and gravel roads is 23 and 24 respectively; remaining is unpaved, which can only be used by vehicles for a few months. From a safety point of view too, the condition of the roads is poor. On the other hand, large vehicles carrying goods or passengers to Kathmandu from the eastern part of Chitwan have to travel an unnecessary distance of about 200 kilometers. The additional economic burden or cost created by this has adversely affected the competitiveness of the entire country and made daily life expensive. There is no significant progress in railways; ropeways are closed. Cable cars built by the private sector are used only for tourism purposes; those are not suitable for daily and business life. More than a dozen national pride and transformational projects are incomplete; the cost is increasing every year. Some projects that were supposed to be completed in five years have not been completed for 15 years, the initially estimated cost has not only doubled but also increased by six times. The achievements mentioned above, in comparison to today’s needs and standard of developed countries, it is clear that we are lagging behind. The per capita income in 1990 was $186, in 2024 this figure increased eightfold to $1517, but due to rapid depreciation of the Nepalese currency against the US dollar it could not strengthen the purchasing power of the people. In terms of region, the per capita income of Bagmati Province was $2,600, while that of Madhes Province was limited to $932, which is less than that of Karnali. This gap has increased dissatisfaction in people.

Comparing neighboring countries, according to the World Bank, Nepal’s per capita annual income is $1,500, while the average per capita income of South Asia is $2,700. The per capita income of the Maldives is almost nine times higher than Nepal’s income. Bhutan’s figure is $3,900, while India’s income is at the average level of South Asia. Bangladesh and Sri Lanka’s income is $2,600 and $4,500, respectively, Nepal is at the bottom. All these matters may have made the people frustrated. 

Against this backdrop, in order to drive the economy in line with the existing consciousness of the society and to move it in the right direction, on the one hand, it is necessary to change the constitution radically and on the other hand, drastic change in governance, systems, processes and procedures keeping the goal of optimal use of resources through good governance and effective management. In fact, the constitution is expansionary, because it increases the cost of state operation and demands a lot of financial resources rather than yielding resources. 

The issue of self-reliance should be taken in mind; because, the development of technology has dismantled the foundation of a self-reliance of the global economy. Nepal’s current economy is like a dependent one, it would be practical to make it interdependent; since currently, and building a self-reliant economy is just ideal thought where a country fulfills all the economic, social, and structural needs of its citizens through its own production and management without relying on foreign trade, aid, or investment. 

In today’s era, the economy cannot be completely self-reliant. China, USA, Japan, and Singapore are also not completely self-reliant. It is practical for Nepal to think of becoming self-reliant in food and electricity sector-wise. So, it is the right time to be proactive to overcome internal contradictions, conflicts, and inefficiencies and work to establish strong interconnections between Nepal’s economy and the global economy. This needs a multifaceted effort.

Both the revenue and expenditure of the government has appeared weak in the mid-term review of the current fiscal year budget. 

According to the Financial Comptroller General Office (FCGO), the government's revenue has shrunk to 38 percent and spending to 35 percent against the annual target as of mid-January. 

For the current fiscal year, the government had proposed a budget of Rs 1,964 billion 110 million. 

By the end of Poush (mid-January), Rs 690 billion 216.4 million had been spent, which comes to 35.14 percent of the annual target. 

The budget expenditure under the current headings for the reporting period is 41.25 percent of the annual target. 

Out of Rs 1,181 billion allocated for current headings, Rs 487 billion 143.1 million has been spent so far. 

The capital expenditure has been reduced to 12.12 percent. 

For the current fiscal year, recurrent budget of Rs 407 billion 888 million was proposed, but only Rs 494.2 million has been spent so far. 

Similarly, under the financial management heading, Rs 375 billion 242 million was allocated for the current fiscal year, and by mid-January 2026 Rs 153 billion 644.9 million has been spent. 

This expenditure constitutes 40.95 percent of the annual allocation for this heading. 

This year the government has set a target of generating total revenue of Rs 1533 billion 446.9 million. 

As of mid-January this year, the revenue generated was only Rs 588 billion 514.2 million which comes to 38.38 percent of the annual target.