Sunday, June 23, 2019

Nepal in Data : Economic Growth, Income, Consumption, Saving and Investment

Economic Growth
  • The average growth rate in the last 10 years in Nepal is 4.6 percent.
  • Economic performance deteriorated during 2014/15 and 2015/16 due to the devastating earthquake and supply disruptions due to Terai movement. 
  • The economy grew by more than 5 percent during the last three years.
Sectoral Performance of the Economy
  • Agriculture sector grew at an average of 3.1 percent during the last 10 years.
  • Industrial sector did not achieve significant expansion.
  • Services sector performed well.
  • During the last three years, agriculture sector grew by 4.3 percent, industrial sector grew by 10 percent and services sector grew by 7.5 percent. 

Structure of the Economy 
  • The contribution of agriculture sector in GDP is declining over time and the contribution of services sector is increasing. However, the contribution of industrial sector is more or less stagnant over time.
  • In 2018/19, the share of agriculture sector  is estimated to be 27.0 percent, the contribution of industrial sector is 15.2 percent and that of services sector is 57.8 percent. 
  • On the expenditure side, Nepal's GDP is basically driven by consumption and investment. The ratio of consumption expenditure to GDP is high but it is on a downward trend during the last four year.
  • However, the gross capital formation GDP ratio is rising over time and has reached 62.3 percent in 2018/19. 
  • The net export component is negative and it is expanding over time.

Components of GDP : Demand Side

2014/15
2015/16
2016/17
2017/18
2018/19
Consumption/GDP
90.8
95.9
86.6
82.2
79.5
GCF/GDP
39.1
33.9
46.8
55.2
62.3
Net Exports /GDP
-29.9
-29.8
-33.4
-37.4
-41.8
  •  On the income side, mixed income/operating surplus comprises almost half of GDP, almost 40 percent is compensation to employees and the rest goes to government in the form of taxes.

Components of GDP : Income Side

2014/15
2015/16
2016/17
2017/18
2018/19
Compensation of Employees
40.7
40.7
39.3
37.6
35.8
Net Taxes
10.9
11.6
12.6
13.9
15.4
Mixed Income/Operating Surplus
48.3
47.7
48.1
48.5
48.8

Saving and Investment  
  • The domestic saving ratio is low. However it is increasing in the last few years  due to lower inflation, higher deposit rates and expansion in financial access in the country. In 2018/19, such ratio is estimated to reach 20.5 percent from 4.1 percent four year ago. 
  • The national saving ratio is higher due to remittance inflow in the country. Such ratio is increasing over time. In 2018/19, such ratio is estimated to reach 52.4 percent.
  • The gross fixed capital formation GDP ratio is rising and is estimated to reach 36.9 percent in 2018/19.
  • The gross capital formation GDP ratio is more than 50 percent. It is estimated to be 62.3percent in 2018/19.
  • The resource gap which is defined to be the difference between Gross National Saving and Gross Capital Formation is negative in the recent years (highest -9.9 percent in 2018/19). During the last 19 years, resource gap is negative in 5 years.

Per Capita Income  
  • The nominal GDP per capita is estimated to reach 1034 USD in 2018/19. The GNI per capita is estimated to be 1047 USD and GNDI per capita is estimated to be 1364.
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