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Nepal’s economy is estimated to have expanded by 4 percent in the fourth quarter of fiscal year 2025/26, supported by strong growth in electricity generation and distribution, financial and insurance services, accommodation and food services, and information and communication.

According to the National Statistics Office (NSO), the economy recorded an estimated year-on-year growth of 4 percent in the quarter covering Baisakh, Jestha and Ashar (mid-April to mid-July 2026), compared with the corresponding period of fiscal year 2024/25.

The NSO published its quarterly national accounts estimates on October 14, 2026, providing an updated assessment of economic activity across 18 industrial classifications.

The latest figures indicate a broad-based expansion, with 17 of the 18 industrial classifications recording positive year-on-year growth. Public administration and defence was the only category to register a contraction.

However, the statistics office noted that economic growth remained moderate, partly because of lower government expenditure and only modest increases in domestic industrial and agricultural production.

The estimates are measured at constant prices using fiscal year 2010/11 as the base year. They are preliminary and may be revised as additional information becomes available.

Electricity sector records strongest growth

Electricity, gas, steam and air-conditioning supply recorded the highest year-on-year growth among the 18 industrial classifications, expanding by 24.36 percent in the fourth quarter.

The sector continued to benefit from increased electricity-related economic activity, making it the strongest-performing category in the latest quarterly estimates.

Financial and insurance activities ranked second, growing by 9.07 percent. Accommodation and food services expanded by 7.84 percent, while information and communication recorded growth of 7.66 percent.

Transportation and storage grew by 6.81 percent, while wholesale and retail trade, including the repair of motor vehicles and motorcycles, expanded by 5.97 percent.

Mining and quarrying recorded growth of 3.34 percent, while professional, scientific and technical activities increased by 3.19 percent.

Real estate activities grew by 2.68 percent, followed by construction at 2.38 percent and water supply, sewerage and waste management at 1.43 percent.

Agriculture, forestry and fishing, the largest sector of the economy by contribution, recorded estimated growth of 1.35 percent. The NSO attributed the positive performance to modest increases in agricultural and forestry production.

Manufacturing grew by 1.44 percent, while education expanded by 1.32 percent. Human health and social work activities recorded growth of 4.70 percent, administrative and support services expanded by 5.55 percent, and other services grew by 3.82 percent.

Public administration and defence, including compulsory social security, was the only sector to contract, declining by 0.12 percent.

Economy expands 1.54% from previous quarter

The seasonally adjusted estimates show that Nepal’s gross domestic product (GDP) increased by 1.54 percent in the fourth quarter compared with the third quarter of fiscal year 2025/26.

The third quarter covered Magh, Falgun and Chaitra, while the fourth quarter covered Baisakh, Jestha and Ashar.

Seasonally adjusted figures account for recurring seasonal patterns in economic activity, allowing a more meaningful comparison between consecutive quarters.

The NSO estimated that 17 of the 18 industrial classifications recorded positive quarter-on-quarter growth during the period.

Accommodation and food services led the seasonally adjusted expansion, growing by 6.05 percent. Electricity and gas supply increased by 3.76 percent, while mining and quarrying expanded by 3.22 percent.

Wholesale and retail trade grew by 2.90 percent, education by 3.07 percent, and financial and insurance activities by 2.10 percent.

Other services expanded by 2 percent, while administrative and support services grew by 1.59 percent. Human health and social work activities increased by 1.12 percent.

Agriculture, forestry and fishing recorded quarter-on-quarter growth of 1.08 percent, while transportation and storage expanded by 0.73 percent.

Information and communication registered marginal growth of 0.07 percent. Manufacturing was the only category to contract, declining by 0.48 percent from the previous quarter.

The quarterly figures suggest that services, electricity-related activities and selected production sectors supported the economy’s expansion toward the end of the fiscal year, although manufacturing remained under pressure.

Agriculture grows modestly as trade expands

Agriculture, forestry and fishing continued to account for the largest share of Nepal’s economic activity, but its estimated year-on-year growth of 1.35 percent was comparatively modest.

The NSO said a moderate increase in agricultural and forestry production contributed to the sector’s positive performance.

Wholesale and retail trade, another major contributor to the economy, grew by 5.97 percent year-on-year. According to the statistics office, increased domestic production of traded goods and higher imports contributed to the expansion.

The sector’s seasonally adjusted growth of 2.90 percent compared with the previous quarter also indicated continued activity in trade and distribution.

Construction grew by 2.38 percent year-on-year and 0.29 percent quarter-on-quarter. The figures indicate positive but limited expansion in the sector.

Manufacturing recorded year-on-year growth of 1.44 percent, but its seasonally adjusted performance declined by 0.48 percent compared with the previous quarter.

The contrasting figures reflect the different comparison periods: year-on-year growth measures performance against the same quarter a year earlier, while quarter-on-quarter growth compares the latest quarter with the immediately preceding one.

Financial services and tourism-related activities support growth

Financial and insurance activities recorded year-on-year growth of 9.07 percent, making them one of the strongest-performing sectors in the fourth quarter.

The sector’s seasonally adjusted growth was 2.10 percent compared with the previous quarter.

Accommodation and food services expanded by 7.84 percent year-on-year after recording a contraction of 1.7 percent in the third quarter of the same fiscal year. Its seasonally adjusted growth of 6.05 percent was the highest among all industrial classifications.

The improvement points to stronger activity in accommodation and food services during the final quarter, although the quarterly national accounts figures do not separately establish how much of the expansion came from tourism, domestic travel or other demand.

Information and communication grew by 7.66 percent year-on-year, while transportation and storage expanded by 6.81 percent.

These results indicate that several service industries continued to contribute to economic growth alongside electricity-related activities.

Government spending and industrial production remain concerns

Despite positive growth across most sectors, the NSO described the overall expansion as moderate.

Lower government expenditure compared with the same quarter of the previous fiscal year was one factor weighing on growth. Modest increases in domestic industrial and agricultural production also limited the pace of expansion.

The manufacturing sector’s quarter-on-quarter contraction further highlights the uneven performance of productive activities.

Although financial services, accommodation and food services, electricity and trade recorded relatively strong growth, the figures show that gains were not uniform across the economy.

The performance of manufacturing and agriculture will remain important to the broader growth outlook because these sectors are closely connected to domestic production, employment and household incomes.

NSO revises quarterly estimates as new data become available

The quarterly national accounts estimates are designed to track short-term changes in economic activity that annual GDP figures alone may not capture.

The NSO has been publishing quarterly national accounts estimates since fiscal year 2004/05, following international standards and methodologies.

For the latest release, the office used economic indicators associated with different activities to estimate quarterly GDP before applying the X-12 ARIMA method to adjust for seasonal effects.

The fourth-quarter estimates also incorporate updates and revisions to figures published for previous quarters.

The office cautioned that quarterly GDP figures measured at constant prices provide a measure of real economic growth rather than the current-price monetary size of the economy.

The latest report therefore offers an initial assessment of Nepal’s economic performance in the final quarter of fiscal year 2025/26, rather than a final accounting of the year’s overall growth.

Outlook: Broad expansion, but growth remains uneven

Nepal’s estimated 4 percent year-on-year growth in the fourth quarter reflects positive momentum across most sectors, particularly electricity, financial services, accommodation and food services, and information and communication.

However, modest agricultural growth, the quarter-on-quarter decline in manufacturing and lower government spending indicate that the expansion remains uneven.

The 1.54 percent seasonally adjusted quarterly increase provides an additional measure of the economy’s short-term momentum, but it should not be interpreted as an annual growth rate.

The final assessment of economic performance will depend on the annual national accounts estimates and any subsequent revisions to quarterly data.

For policymakers, the figures highlight the importance of sustaining growth in expanding service and energy sectors while strengthening domestic production, improving agricultural performance and addressing constraints affecting manufacturing and public expenditure.