Economic Growth for Current FY Revised Down to 3.5 Percent

The government has revised the country’s economic growth projection for the current fiscal year (FY 2025/26) down to 3.5 percent from the initial target of six percent, according to the mid-term budget review made public on Tuesday.

The annual growth rate of gross domestic product (GDP) for the current fiscal year had initially been projected at six percent. However, the mid-term review scaled down the estimate to 3.5 percent, citing a decline in paddy production, cultivated area and productivity, sluggish performance in the construction sector, and a downturn in real estate transactions. In the previous fiscal year (FY 2024/25), GDP growth was estimated at 4.6 percent.

According to the mid-term review report, preliminary estimates show that GDP at basic prices grew by three percent in the first quarter of the current fiscal year. The revised estimate for the same period last fiscal year showed a 2.9 percent growth.

In the first quarter of the current fiscal year, the total value added of the agriculture sector is estimated to have expanded by 1.36 percent compared to the same period last year. The relatively lower growth is attributed mainly to an expected decline in paddy production, despite projected increases in livestock, vegetable and fruit production. Production of maize, millet and buckwheat, among other food crops, is expected to increase this fiscal year.

During the first quarter, the total value added in the industrial sector is estimated to have expanded by 5.44 percent compared to the same period last year. Expansion in energy and construction activities is expected to have a positive impact on the overall industrial sector. Value added in the manufacturing sector is projected to increase by 1.52 percent in the first quarter.

Similarly, the total value added in the service sector is estimated to have expanded by 3.03 percent in the first quarter compared to the same period last year. Growth in wholesale and retail trade, financial intermediation, public administration and defence, tourism-related activities, and personal services is expected to support overall service sector performance.

According to the mid-term review report, average inflation during the first six months of the current fiscal year stood at 1.7 percent, compared to 4.97 percent in the corresponding period last year. -- RSS