Decline in production of food stuffs and delay in political resolution have dragged the economic growth down to 2.5 percent this fiscal year, estimates the Central Bureau of Statistics (CBS).
According to a report in Kantipur daily, this is the least growth rate witnessed in the last five years. Last year, the economy had grown by 2.8 percent.
When it presented the budget of this fiscal year, the government had predicted there would be 4.5 percent growth in economy. However, the production of food stuffs decreased by 2.78 percent this year while wholesale and retail trade also came down by 2.6 percent.
Meanwhile, despite deepening economic sluggishness, per capita income in Nepali rupee terms increased by 8.8 percent to Rs 27,209 in the current fiscal year 2006-07 - which is expected to cross the Rs 100 billion this year.
Similarly, per capita GDP (Gross Domestic Product) in dollar terms increased to US$ 383 from last year's US$ 350, a 9.4 percent increment which is much higher than the annual average population growth rate of 2.25 percent.
According to the national accounts for fiscal year 2006-07, the overall economy of the country is estimated to expand by 2.29 percent to Rs 486.84 billion (US$ 6.85 billion when calculated at an annual average exchange rate of Rs 71.06 per dollar) at constant prices of 2000-01.
The expected GDP growth for the current fiscal year is less than half the targeted rate. The government had set a target of achieving 5 percent GDP growth this year.
In addition, given the growth rate estimate for this year, which is also the last fiscal year of the Tenth Plan, the average growth of the plan period remained 3.3 percent, as low as nearly half the targeted growth rate.
However, at current prices that also accommodate annual inflation, the size of the economy is expected to touch Rs 670.6 billion (US$ 9.4 billion), which is 11.1 percent more than the size of economy last year.
Among the major sectors in the national accounts, which were re-categorized into 15 sub-groups with 2000/01 as a new base, the agricultural sector, which contributes 34 percent to the national economy, increased by a mere 0.7 percent mainly due to erratic monsoon. The growth in fact is the lowest in the last five years.
Likewise, the non-agriculture sector is expected to grow by 3.6 percent, one percentage point less than last year's 4.6 percent. Among the major sub-sectors of the non-agriculture sector, industry grew by 2.2 percent while the services sector went up by 4.1 percent.
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