Nepal's Economy Contracted by 2 percent due to COVID-19 in 2020

The Central Bureau of Statistics (CBS) of Nepal has published the revised estimates about the growth performance of the Nepali economy in 2020 on March 4, 2021. As per the estimates, Nepali economy contracted by 1.99 percent in 2020. This is the second shock in the economy after the devastating earthquake of 2015/16 during which the growth rate fell to zero percent. 

After 2016/17 onward,  Nepali economy was growing by more than 7 percent on the average. However, the COVID crisis severely affected the economic activities as such the growth performance was accordingly affected. 

  In terms of sector-wise performance,  accommodation industry, transport and manufacturing were hard hit by the COVID crisis.  The accommodation industry contracted by 25.72 percent in 2020 compared to a growth of 9.92 percent in the previous year.

On the quarterly basis,  the growth rate fell to negative 15.4 percent due to the restrictions imposed by the COVID crisis. Even in the first quarter of 2020/21, quarterly GDP has declined by 4.6 percent. This shows that it will take further for the economy to be back on the normal track.

On a quarterly basis also, accommodation sector was hardest hit by the COVID pandemic. in Q4 of 2019/20, output of this sector declined by 79.8 percent compared to Q4 of 2108/19. In the Q1 of 2020/21 also, such output has contracted by 71 percent.

This shows that the hotel and related sectors are still running at very low capacity and there are lot challenges for the revival of this sector.

 

Siddha Raj Bhatta