Laxmi Capital News
Gross domestic savings to stand at 15 percent of GDP this fiscal CBS

The Saving habits of Nepalis is expected to improvesignificantly in the current fiscal year, indicating that people are investingmore than they used to about two and half decades ago.

Nepalis are expected to save Rs 15.01 out of Rs 100 worthof goods and services produced in the country in the current fiscal yearFY2017/18 - a record high since FY1994/1995, shows a preliminary estimate ofthe national accounts made public by the Central Bureau of Statistics (CBS) onWednesday.

This means only Rs 84.99 out of every Rs 100 worth ofgoods and services produced in the country will be consumed in the currentfiscal year.

According to the CBS, the country’s economy is projectedto grow by 5.89 percent to a little over Rs 3 trillion and the expected valueof savings is in tune of Rs 450 billion. This saving may be in different formsi.e. in banks or in different forms of investments. 

Likewise, the preliminary estimate shows that more shareof GDP will go into capital formation in the fiscal year. The estimates showthat 34.11 percent of GDP, or Rs 1032 billion, is expected to be invested todevelop hydropower projects, and build roads and other infrastructure projects.
In the past fiscal year, such share was only 31.81 percent of GDP.

Jishnu Mohan Bhattarai, a director of CBS, explained thatthe consumption by Nepalis has slowed down in proportion to generation of goodsand services in the year. “As more share of GDP will go into capital formation,it will drive the economy further in the new fiscal year,” he added.

Both indicators bode well for the country’s economy whichsaw a near zero growth in FY2015/16 due to 2015 earthquakes and 20-week supplydisruption due to Indian blockade. During the fiscal year, such saving, whichwas at 4.07 percent, was the lowest in the past two decades. However, capitalformation had seen a minor increment of a little over 1 percent to 28.73percent of GDP.
These two indicators have made economists and statisticians upbeat about theperformance of economy in the coming fiscal year as well, as investments fromsaving will accelerate the economy to a new height.

“We are hopeful about better economic prospects in thenext fiscal year as well. I think the growth will be near 7 percent in nextfiscal year,” added Bhattarai. 

Rameshore Khanal, a former finance secretary, said: “Thepreliminary estimates show that domestic savings and gross capital formationhas increased. It will help to accelerate economic growth in the coming years.”He expects the growth rate to hover above 6 percent in the next fiscal yearbecause mining, tourism, manufacturing and electricity sectors will continue togrow at a higher rate next year as well.

“As share of agriculture is going down, even a badweather will not dampen the growth,” added Khanal. 

The economic growth of 7.39 percent recorded in FY2016/17is the highest in the past two decades mainly due to a low base of near zerogrowth because of the damages by the 2015 earthquakes and subsequent Indianblockade.

Source : My Republica, 29th April 2018

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