Agriculture vs Industry vs Service Growth Nepal (2025/26)
Nepal's three major economic sectors — agriculture, industry, and services — are showing divergent trends in FY 2025/26 based on NRB credit flow data and macroeconomic indicators.
Sector Credit Comparison
| Sector | Credit (Rs. M) | Growth | Signal |
|---|---|---|---|
| Agriculture | 409,593 | -1.99% | Contracting |
| Manufacturing | 933,479 | +5.59% | Moderate growth |
| Construction | 231,393 | +9.51% | Strong |
| Services | 488,550 | +8.05% | Strong |
| Electricity | 436,060 | +10.45% | Very strong |
| Wholesale/Retail | 1,033,244 | +4.43% | Steady |
Agriculture: The Laggard
Agriculture credit is declining (-1.99%) despite agriculture being ~25% of GDP. Farming services (-6.11%) and tea (-8.32%) are particularly weak. This reflects banks' risk aversion toward agriculture and structural challenges in the sector.
Industry: Moderate but Positive
Manufacturing credit (+5.59%) is healthy, led by food production (+6.51%) and agriculture-based manufacturing (+6.14%). Construction (+9.51%) and electricity (+10.45%) show strong investment. However, overall industrial credit growth at ~6% is modest given the economy's needs.
Services: The Growth Engine
Services (+8.05%) are the fastest-growing credit sector. Hotels (+6.15%), health services (+6.35%), and education (+4.68%) drive this growth. Tourism recovery is supporting the hospitality sector with tourist arrivals up +15.7% in January 2026.
GDP Context
Nepal's GDP growth of 3.99% is primarily services-led, consistent with the credit data. The structural shift from agriculture toward services is accelerating — a common pattern in developing economies but one that requires careful management to avoid leaving rural populations behind.
Conclusion
Nepal's economy is increasingly services-driven with moderate industrial growth and declining agriculture. Policymakers need to address the agriculture credit gap and ensure the transition doesn't increase rural-urban inequality.