Nepal’s economy expands by 3.51% in Q3, energy sector posts impressive growth

KATHMANDU, July 6: Nepal's economy is estimated to have expanded by 3.51 percent in the third quarter of the current Fiscal Year (FY), with the electricity and gas sector making the largest contribution to the country's overall economic growth.

The National Statistics Office (NSO)'s third quarterly report shows that the country's economy grew by less than five percent at constant prices during the period between mid-July 2025 and mid-April 2026. While most sectors recorded modest growth, the electricity and gas sector posted an impressive 24.88 percent expansion, making it the largest contributor to overall economic growth during the review period.

The NSO report attributes the economy's moderate growth to strong performances in the electricity and gas, banking and insurance, transport and storage, and wholesale and retail trade sectors. However, slower growth in agriculture, construction, and manufacturing weighed heavily on the overall pace of economic expansion.

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Among the 18 industrial classifications, 16 sectors recorded positive gross value added growth compared to the same period in the previous fiscal year. Following the electricity and gas sector, banking and insurance grew by 10.27 percent, while transport and storage expanded by 7.83 percent.

In contrast, the manufacturing sector contracted by 0.54 percent, while public administration and defence declined by 1.59 percent, making them the only sectors to register negative growth.

Despite remaining the largest contributor to Nepal's economy, the agriculture sector is estimated to have grown by only 1.58 percent. Overall, the broader agriculture, forestry and fisheries sector is projected to record a marginal contraction of 0.04 percent during the review period.

According to the NSO, Nepal's economy is estimated to have reached Rs 6.465 trillion by mid-April 2026, up from Rs 6.427 trillion recorded in mid-January.

The NSO has projected the country's economic growth rate at constant prices at 3.65 percent for the entire FY 2025/26. This is lower than the government's economic growth target of six percent for the fiscal year.