April 3: Nepal's economy has improved somewhat in the second quarter of the current fiscal year (FY), but some important sectors of the economy are still in a state of slowdown, according to the latest data of the government.

Releasing the data of the second quarter of the current fiscal year on Tuesday, the National Statistics Office (NSO) said that there has been no significant improvement in the business and industrial sectors which are considered as the main pillars of the economy.

According to the office, economic growth is expected to be around 4 percent in the second quarter of the current year compared to the negative growth in the second quarter of last fiscal year. In the same quarter of last year, the growth rate of the economy was negative by 0.8 percent.

In the second quarter of the current fiscal year, the growth rate of the wholesale and retail trade sector has been limited to 0.5 percent compared to the same period of the previous year. It is said that the growth of the business sector has not been satisfactory due to the decline in the import of commercial goods.

According to the Department of Customs, imports have decreased by 2.66 percent in the first eight months of the current year. Wholesale and retail trade is the second largest contributor to the economy after agriculture.

According to the office, the growth rate of the industrial goods production sector in this quarter is negative by 0.4 percent. Compared to the second quarter of the previous year, the growth of this sector has remained negative due to the reduction in the production of industrial goods during the same period of the current year.

As the economy has failed to improve significantly, the central bank informed that investable capital of around Rs 650 billion has accumulated in the banks. Deputy Chief Statistics Officer of the National Statistics Office Dr Hemraj Regmi said that although there has been a general improvement in the economy, the improvement has not been as expected.

The government has set a target of 6 percent growth this year. However, Regmi says that it will be difficult to achieve this goal. According to Regmi, it is not a good sign for the production of industrial goods as well as trade to remain almost negative.

According to the National Statistics Office, the increase in the total value added of the hotel sector along with the increase in rice and other agricultural products and the increase in the arrival of tourists can be attributed as the reasons for the 4 percent economic growth.

It is estimated that the value added growth rate of agriculture, forestry and fishing sector, which occupies the largest share in the economy, will be 3 percent. It is said that the total value added growth rate of 17 industrial sectors is positive out of the total 18 industrial sectors classified by the office.

Among them, the growth rate of activities related to accommodation and food services is the highest (29.3 percent), while electricity and gas is the second fastest growing industrial sector with a growth rate of 17.1 percent followed by the transport and storage sector with a growth rate of 14.3 percent.

Similarly, the value added growth rate of the mining and quarrying sector is estimated to be 9.4 percent. The 2.2 percent increase in the construction sector seems to have had a positive effect on the growth rate of the mining and excavation sector, which is directly dependent on the construction sector.

Along with the increase in deposits and loans, there is a positive effect on the growth rate of the financial and insurance sector (9.1 percent). In addition to this, the data of the NSO shows that the overall economy is heading towards a positive growth despite the negative growth in the business and industry sectors.

Preliminary estimate of the National Statistics Office shows that the gross domestic product will increase by 0.7 percent in the second quarter compared to the first quarter of the current fiscal year.

Regmi says that since the growth rate in the second quarter is very small compared to the first quarter, the economy has not seen a comprehensive improvement in the current year.

Economist Keshav Acharya says that it is necessary for the government to fix the recession in the industrial and commercial sectors, which are considered important in creating jobs. According to him, the role of these sectors are important to keep the economy running. He suggested that the government should spend enough development budget to make the economy vibrant because the construction sector is not active.