Nepal’s Economy Grows 4.61% in FY 2024/25: Services Lead, Agriculture Lags Behind

Nepal’s economy recorded a growth rate of 4.61% in FY 2024/25 (Nepali FY 2081/82), according to data released by the Central Bureau of Statistics (CBS). While the pace of expansion slowed compared to the previous year, analysts say the services sector remained the backbone of growth, offsetting weaknesses in agriculture.

Uneven Growth Across Sectors

The agriculture sector grew by just 3.28%, reflecting the impact of erratic weather, rising production costs, and labor shortages. Experts note that agriculture continues to struggle with structural bottlenecks, limiting its ability to drive the broader economy.

The industrial sector expanded by 4.53%, driven by improvements in construction, hydropower, and manufacturing. However, heavy reliance on imported raw materials remains a challenge for sustainable industrial growth.

The services sector, meanwhile, remained the dominant contributor, growing 4.21% and accounting for 62.01% of total GDP. Tourism recovery, improved transportation, digital communication, and stronger financial services underpinned this momentum.

Savings and Investment Constraints

Domestic savings remained relatively weak. Gross domestic savings stood at 6.55% of GDP, while gross fixed capital formation and gross national savings accounted for 24.07% and 36.24% of GDP, respectively. Economists argue that low domestic savings continue to restrict the country’s ability to mobilize internal resources for infrastructure and long-term development projects.

Energy Expansion

The energy sector recorded significant progress, with installed electricity capacity reaching 3,591 MW, of which 3,390 MW came from hydropower projects. Analysts highlight that Nepal’s growing energy output provides an opportunity to strengthen domestic industries and expand electricity exports to neighboring markets.

Tourism Recovery Shows Promise

Tourism also showed signs of revival. Tourist arrivals increased by 1.7%, reaching 1,147,834 visitors during the fiscal year. Although still below pre-pandemic levels, stakeholders believe that sustained promotional campaigns, better connectivity, and infrastructure development could restore the sector as a key foreign exchange earner.

Nepal’s FY 2024/25 economic performance reflects both resilience and vulnerability. The services sector has emerged as the main growth driver, while agriculture continues to underperform. The expansion of hydropower and the gradual recovery of tourism signal promising opportunities. Still, without stronger domestic savings, higher investments, and structural reforms, sustaining higher long-term growth will remain a challenge, experts warn.