Economic Digest: Nepal’s Business News in a Snap

Nepal's Economy Kicks Off 2025-26 with Strong Momentum

Nepal's economy has started the fiscal year 2025-26 on a high note, recording its highest quarterly growth in three years.

Gross domestic product rose by 3.02 percent in the first quarter from mid-July to mid-October, outpacing the 2.9 percent seen in the same period over the previous two years.

This marks a promising shift after years of modest expansion, with key sectors like financial and insurance services growing around 7 percent and professional services up by about 5.5 percent.

Agriculture, the country's largest economic pillar, expanded by 1.36 percent, while wholesale and retail trade, the second biggest contributor, saw nearly 3.9 percent growth fueled by better domestic production and imports.

Analysts point to this momentum as a potential boost for businesses, job creation, and overall development in the Himalayan nation.

Stock Market Shows Resilience Amid Fluctuations

The Nepal Stock Exchange wrapped up a recent trading day with a slight uptick, as the Nepse index climbed 4.45 points or 0.15 percent to close at 2,824.90.

Turnover hit a solid Rs14.32 billion, with over 39 million shares exchanged through more than 124,000 transactions.

While 124 companies saw share price gains, 130 experienced declines, and nine stayed flat, reflecting the market's typical ebb and flow.

Sectoral results were mixed: trading, development banks, banking, and manufacturing posted advances, but hotel and tourism, investment, life insurance, and mutual funds dipped.

Standouts included Solukhola Hydropower Company, whose shares jumped 10 percent and hit the circuit breaker.

This modest recovery comes after recent volatility, signaling cautious optimism among investors navigating Nepal's dynamic financial scene.

New Leadership Emerges from Recent Elections

Nepal's political scene has shifted dramatically following national elections earlier this year, with rapper-turned-politician and former Kathmandu mayor Balendra Shah stepping up as the country's youngest Prime Minister.

The vote, which drew nearly 19 million eligible voters out of a 30 million population, centered on critical issues like jobs and economic revival, especially for the youth who played a key role in toppling the previous government led by K.P. Sharma Oli last September.

Of the 275 seats in the House of Representatives, 165 were decided by direct contests and the rest through proportional representation.

Shah, from the Rastriya Swatantra Party, edged out heavyweights like Oli of the Communist Party of Nepal (Unified Marxist-Leninist) and Nepali Congress's Gagan Thapa.

"We are committed to building an economy that works for every Nepali, especially the youth who demanded change through the streets. Jobs, growth, and stability will be our top priorities," Shah stated after signing his first official documents as PM.

India and other neighbors are closely monitoring these developments given their stakes in Nepal's strategic position.

Looking back, Nepal's tenth five-year plan, which wrapped up in mid-July, delivered an average annual growth of 3.4 percent, laying groundwork for the current upswing.

Challenges persist, including health concerns like annual tuberculosis cases numbering around 67,000 and 16,000 deaths, alongside isolated issues such as bird flu outbreaks prompting culls in affected areas.

Yet, with a fresh government and positive economic signals, there's renewed hope for sustained progress.

In summary, Nepal's business news paints a picture of cautious optimism: strong quarterly growth, a resilient stock market, and new leadership prioritizing economic reforms and youth employment. These developments could pave the way for broader stability and prosperity in the coming months.