Overview: Eight Months of Nepal's Economy (FY 2025/26)
Nepal Rastra Bank's eight-month economic data for fiscal year 2082/83 (2025/26), covering the period up to mid-March 2026 (mid-Falgun 2082), reveals a broadly improving macroeconomic picture. Inflation is at multi-year lows, the current account is in surplus, and real GDP growth is on an upward trajectory. This article unpacks the full eight-month dataset in clear, accessible terms.
1. Real GDP Growth
Nepal's economy continues its post-COVID recovery trajectory:
- 2025/26 projected growth: 3.99% (Real GDP at basic price)
- 2024/25: 3.36%
- 2022/23: 2.29% (post-pandemic lows)
- Pre-COVID peak (2018/19): 6.39%
The recovery is gradual — Nepal has not yet returned to the 6-8% growth rates of the mid-2010s, but the direction is positive. Nominal GDP growth for 2025/26 is estimated at 6.97%, reflecting both real growth and moderate inflation.
2. Inflation: A Multi-Year Low
The most striking data point in the eight-month report is the dramatic decline in inflation. Consumer Price Index (CPI) inflation on a year-on-year basis has fallen sharply:
| Fiscal Year | 8-Month Average CPI Y-o-Y |
|---|---|
| 2022/23 | 7.74% |
| 2023/24 | 5.44% |
| 2024/25 | 4.06% |
| 2025/26 (8 months) | 2.13% |
This is Nepal's lowest sustained inflation rate in several years. The March 2026 reading of 3.62% is higher than the first-half average but still well below historical norms. Falling global commodity prices, particularly oil, and subdued domestic demand have contributed to this disinflation.
3. Balance of Payments: Current Account Surplus
Nepal's current account position has improved significantly:
- Current Account Balance (8 months 2025/26): +Rs 552,847.68 million surplus
- In USD terms: +$3,875.33 million surplus
- 2024/25 (8 months): +Rs 197,026.99 million surplus (smaller)
The current account surplus has expanded substantially year-on-year, driven primarily by remittance inflows. The goods trade deficit remains wide at approximately Rs 1.05 trillion, but services surpluses and remittances more than offset it.
4. Labor Migration Trends
The eight-month data on Nepali workers obtaining foreign employment permits reveals a notable shift:
- UAE: 70,706 workers (-43.34% from 2024/25 eight-month period of 124,794)
- Saudi Arabia: 39,922 (-22.37%)
- Malaysia: 29,955 (recovering after a pause in 2024/25)
- Qatar: 29,439 (-11.76%)
- Kuwait: 21,473 (-17.57%)
Overall labor permit numbers are down significantly, particularly to the UAE. This could reflect tightening labour import policies in Gulf countries, diplomatic factors, or a shift in destinations. Despite lower migration numbers, remittance inflows to Nepal remain robust — suggesting higher per-worker remittance amounts or strong contributions from existing migrants.
5. Tourist Arrivals
International tourism to Nepal continues to recover:
- January 2026: 92,573 arrivals (vs 79,991 in January 2025 — +15.7%)
- February 2026: 105,441 arrivals (vs 96,880 in February 2025 — +8.8%)
Tourism growth is tracking positively, though the sector has not yet fully returned to pre-COVID peaks. Nepal's unique positioning as a global trekking and mountaineering destination continues to draw visitors year-round.
6. Key Takeaways for Investors and Policymakers
- Inflation at 2.13% eight-month average gives NRB room to ease monetary policy if needed to support growth
- The expanded current account surplus strengthens Nepal's foreign exchange reserve position
- Declining labor migration numbers to the Gulf warrant monitoring — any sustained decline could eventually pressure remittance inflows
- Tourism growth above 10% year-on-year is a positive demand signal for the hospitality and service sectors
- The GDP growth trajectory (3.99% projected) remains well below Nepal's potential — structural reforms are needed to accelerate to 6%+ growth