FY2013 has been a disappointing year for Nepal, both politically and economically. Political disagreement continues (though with a slightly optimistic pointer following a technocratic government and its mandate to hold elections by December 2013).
On the economic front, it has been even more disappointing. Real GDP growth (at basic prices) is projected to drop to 3.6% in FY2013, down from 4.5% in FY2012 (ADB projected it to be 3.5%; the IMF says it might be even below 3%), thanks to the unfavorable (late and low) monsoon, shortage of chemical fertilizers during peak planting season, a slight decline in growth of remittances, and the continually weak industrial sector.
|GDP growth rate (basic prices)||3.85||4.48||3.56|
|Composition of GDP (%)|
The Ministry of Agriculture Development (MoAD) has come up with new estimates for agriculture production for FY2013. And, its not good (more here), thanks mostly to the unfavorable monsoon:
Production of paddy and maize declined to 4.5 million tons and 1.99 million tons, respectively (a drop by 11.3 percent and 8.3 percent, respectively).
Production of millet also went down by 3 percent to 305,588 tons.
Production of wheat, barley and buckwheat increased by 2 percent, 6 percent and 0.3 percent, respectively to 1.88 million tons, 36973 tons and 10,056 tons.
Total food surplus will decline to 408,000 tons this year from 8 86,000 tons recorded in the last fiscal year.
Total food available for consumption in the form of milled rice and flour will remain at 5.64 million tons. Around 5.24 million tons of food is needed to feed an estimated 27.5 million people whose per capita consumption has been recorded at 191 kg.
Rice deficit of 900,000 tons, but maize and wheat surpluses of 262,000 tons and 1.05 million tons, respectively.
Number of districts facing food deficit has increased by six to 33 in FY2013.
Food production in Tarai expected to drop to 429,238 tons in FY2013 from 777,600 tons in FY2012.
Similarly, mountain and hilly regions to record deficit of 15,767 tons and 5,029 tons respectively in FY2013.
The importance of agriculture for inclusive development and to support modest economic growth cannot be overstated. About 76.3 percent of households in Nepal depend on agriculture for livelihood and 83 percent of the population lives in rural areas, which is mostly agriculture dependent. Furthermore, the agricultural sector constitutes about 35 percent of the country's GDP.
With a normal monsoon in FY2013 and timely availability of chemical fertilizers, agriculture sector might post a growth rates close to 5%. This combined with a rise in growth of remittance inflows, which supports services sector growth, might push overall GDP growth (at basic prices) well above 4%.