Nepal’s Gross Domestic Product (GDP) of current fiscal year 2073/74 is expected to be 6.94%. It will be the highest growth that Nepal has achieved in the last two decades. A growth of 8.4% was seen 24 years back, in 1993.
Good weather condition brought a growth in agricultural sector, progress in post-earthquake reconstruction work and diminishing load-shedding were the major contributors for the expected growth. Primary sector (agriculture, forest, mine) has a contribution of 30% in the GDP, whereas secondary sector (industry, electricity, gas, hydro) and service sector have contributed 14% and 55.99% respectively.
There was an astonishing growth not only in agricultural sector but also in non-agricultural sector. Commercialization in agriculture, use of income from remittance in the productive sectors, government stability and decline in strikes/bandh are also the major reasons for the expected growth.
As per the Central Bureau of statistics, per person GDP will be Rs. 90,521 in this year.
RELATION WITH NEPSE
Stock market of a country is said to the mirror of its economy. A progress in national economy gets reflected in the stock market. Since the stock exchange covers the companies of diverse sectors, the progress in overall sector can be anticipated through the benchmark index.
Even in case of Nepal, movement in GDP has shown direct effect in NEPSE. In the year 2064/65 and 2070/71 when the GDP was 5.8% and 5.7%, the benchmark index had made a high of 961.4 and 1,036.11 respectively. However, due to absence of real sectors and dominance of BFIs in the capital market of Nepal, it is unable to give a clear view of the national economy.
Relation of GDP and NEPSE
Also see:
GDP & NEPSE Chart
| COUNTRY |
GDP Growth Rate (%) |
Stock Exchange |
INDEX |
| India |
7 |
BSE: SENSEX |
29,943 |
| Sri Lanka |
5.30 |
CSE: ASPI |
6,516.26 |
| Bangladesh |
7.11 |
DSEX |
5,517 |
For those countries whose economies have been growing with high growth rates, the growth can also be seen in their share markets. For example, India’s GDP grew by 7% last year and its BSE: SENSEX index is hovering around 29,900. Similar figures can be seen in case of Sri Lanka and Bangladesh. Since the stock market is a diversified field with companies of all sectors, growth in any or all of the sectors will directly affect the stock market.
However, the same is not entirely applicable for Nepal’s stock market, which mainly consists of BFIs. Further more, the stock market is more driven by political influence rather than the economy. Inclusion of real sectors into the capital market will help reduce its volatility and help for its betterment.
Ujjwal Bohara
