Nepal Full Economic Report 2025/26 (Mid-March Update)
This comprehensive report covers all major aspects of Nepal's economy based on NRB's 8-month data for FY 2025/26 (mid-July 2025 to mid-March 2026).
1. Growth & Output
GDP growth: 3.99% (projected), up from 3.36% in 2024/25. Government target was 6% — shortfall remains significant.
2. Prices & Inflation
CPI: 2.13% average, 3.62% in March. Rising trend driven by food prices and exchange rate depreciation. Province range: 2.21% (Karnali) to 4.95% (Madhesh). NRB target: 5.5-6.5%.
3. External Trade
Exports: Rs. 191,112M (+20.83%). Imports: Rs. 1,289,250M (+12.54%). Deficit: Rs. 1,098,138M (+11.22%). Top export: Soyabean oil (39.65%). Top import: Petroleum (14.37%). India: 59.49% of total trade. China deficit growing +21.94%.
4. Remittances & Migration
Workers remittances: Rs. 1,449,653M (+37.67%) / $10,149M (+31.02%). New permits: 273,536 (-13.73%). Renewal permits: 251,985 (+15.91%). UAE: -43.34%. Malaysia: +2,685% (reopened).
5. Balance of Payments
Current account: +Rs. 552,848M surplus (~$3,875M). Secondary income: Rs. 1,591,655M. Remittances exceed trade deficit by Rs. 351,514M.
6. Exchange Rate
NPR/USD: 140.09 (Aug) → 147.94 (Mar). All-time weak. FY avg: ~141.6. Prior year avg: 136.29. Depreciation ~3.9% YoY.
7. Monetary Policy
Repo rate: 4.5% → 4.25% (Dec) → 5.0% (Jan-Mar). Bank rate: 6.5%. CRR: 4%. M2 growth: ~7%. Policy shifted from easing to tightening.
8. Interest Rates
CB lending: 7.26% (Dec low) → 8.40% (Mar). CB deposit: 3.66% → 4.54%. Interbank: 2.75-3.0%. Spread: ~3.8%.
9. Banking Sector
Deposits: Rs. 7,780,242M (+6.52%). Credit: Rs. 5,592,070M (+5.72%). Individual deposits: +8.99%. FCY deposits: +52.21%. No systemic stress.
10. Fiscal
Revenue: Rs. 751,857M (+3.04%). VAT: 30%, Income tax: 22.7% (-1.42%). Domestic debt: ~Rs. 1,328,559M. T-Bills: Rs. 309,662M (-17.5%). Dev bonds: Rs. 1,018,897M (+16.6%).
11. Capital Market
NEPSE: 2,820.45 (+3.07%). Market cap: Rs. 4,744,734M (+4.42%). Turnover: Rs. 102,260M (-69.07%). Market cap/GDP: 77.69%. Banking sub-index: +6.81%.
12. Tourism
January 2026: 92,573 (+15.7%). February: 105,441 (+8.8%). Hotel credit: Rs. 222,914M (+6.15%). October 2025 peak: 128,443.
13. Sector Credit
Top: Consumption Rs. 1,151,769M (+6.66%). Manufacturing Rs. 933,479M (+5.59%). Services Rs. 488,550M (+8.05%). Electricity Rs. 436,060M (+10.45%). Agriculture declining -1.99%.
Overall Assessment
Nepal's economy in 8M 2025/26 is cautiously positive — strong external buffers (remittances, reserves, BoP surplus) but emerging domestic pressures (inflation, currency, fiscal underperformance, market liquidity). Policy priorities: inflation management, agriculture revival, export diversification, and fiscal strengthening.