Kathmandu Nepal, January 4, 2025 — Nepal's economy is on a path of "steady but cautious" recovery, with a projected expansion of 4% at current prices for the fiscal year 2024/25, according to the latest annual macroeconomic report released by Nepal Rastra Bank (NRB).
The central bank’s highlights, issued this week, indicate that the nation is gradually overcoming a period of subdued growth, revising last year’s performance (FY 2023/24) slightly upward to 3.7%. Officials noted that while structural and political shifts continue to create a complex environment, key sectors are showing signs of stabilization.
Services Remain Economic Engine
The service sector continues to dominate Nepal’s financial landscape, expected to contribute a significant 62% of the Gross Domestic Product (GDP). Agriculture and industry follow, with projected shares of 25.2% and 12.8%, respectively.
Despite the national growth, regional disparities remain stark. Bagmati Province continues to be the country's economic powerhouse, generating 36.5% of the national output. Conversely, Karnali Province recorded the smallest economic footprint, contributing only 4.2% to the GDP. Amidst these figures, the NRB projected the national per capita Gross National Income (GNI) to reach USD 1,517.
Infrastructure Losses Loom Large
The report casts a sobering light on the recent civil unrest, revealing that the "Gen Z" protests of late 2025 resulted in infrastructure damage totaling Rs 84.45 billion. The movement, which affected all seven provinces, caused widespread destruction to public and private property, including the damage of over 2,600 buildings and 12,000 vehicles.
A government-formed committee under the National Planning Commission has already submitted a reconstruction plan, estimating that at least Rs 36.3 billion will be required to rebuild essential public infrastructure.
Inflation and Election Risks
On the pricing front, annual average consumer price inflation stood at 4.06%, down from 5.44% a year ago. The NRB expects inflation to remain around the 4% mark for the remainder of the fiscal year.
However, the bank cautioned that stability is not guaranteed. While a decline in global fuel prices has provided a much-needed buffer, domestic risks—including regional rice shortages and significant anticipated spending for the upcoming March 5 general elections—could exert upward pressure on prices in the coming months.
