Bagmati, Gandaki to outperform National Economic Growth; Madhesh seen as weakest performer

KATHMANDU: Nepal’s Bagmati and Gandaki provinces are projected to outperform the national economic growth average in the current fiscal year 2082/83 (2025/26), according to preliminary provincial accounts estimates released by the National Statistics Office (NSO) on Wednesday.

The latest data shows Bagmati Province is expected to record the highest economic growth rate at 5.40 percent, followed by Gandaki Province at 5.01 percent, significantly above the estimated national GDP growth rate of 3.85 percent for the current fiscal year.

National Statistics Office

Officials said economic expansion in Bagmati and Gandaki is likely to remain stronger than the national average, while Madhesh Province is projected to post the weakest growth performance among all seven provinces.

According to NSO Deputy Chief Statistics Officer and spokesperson Dhundiraj Lamichhane, Madhesh Province’s economy is expected to grow by only 1.31 percent, marking the lowest provincial growth rate in the country.

Provincial Economic Growth Outlook

The NSO’s preliminary estimates for provincial economic growth in FY 2082/83 are:

Bagmati Remains Nepal’s Economic Engine

Bagmati Province continues to dominate Nepal’s economy and is projected to contribute the largest share to national gross domestic product (GDP).

The NSO estimates Nepal’s economy at around Rs 6.6 trillion at consumer prices during the current fiscal year. Of this, Bagmati alone is expected to account for Rs 2.423 trillion, representing 36.7 percent of national GDP.

Other provinces’ contributions to the national economy are estimated as follows:

• Koshi: Rs 1.043 trillion (15.8%)
• Lumbini: Rs 937 billion (14.2%)
• Madhesh: Rs 863 billion (13.1%)
• Gandaki: Rs 593 billion (9%)
• Sudurpashchim: Rs 464 billion (7%)
• Karnali: Rs 277 billion (4.2%)

Bagmati’s economic dominance has remained consistent over the years due to its concentration of urban centers, financial institutions, industries, wholesale and retail trade, and service-sector activities.

Growth Improves in Some Provinces, Weakens in Others

Compared to the previous fiscal year, Koshi, Bagmati, Gandaki, and Sudurpashchim provinces have recorded improvements in growth rates.

Koshi’s growth improved from 2.72 percent last year to 3.13 percent, while Bagmati increased marginally from 5.29 percent to 5.40 percent.

Similarly, Gandaki’s economy expanded from 4.92 percent last year to an estimated 5.01 percent this year, maintaining strong momentum.

However, several provinces saw a slowdown.

Madhesh Province experienced the sharpest decline, falling from 4.43 percent growth last year to just 1.31 percent this fiscal year.

Likewise, Lumbini’s growth dropped from 4.27 percent to 2.87 percent, while Karnali’s economic growth slowed sharply from 5.25 percent to 2.94 percent.

Sudurpashchim saw only a slight improvement from 3.21 percent to 3.38 percent.

Agriculture Dominates Outside Bagmati

Sectoral analysis of provincial economies shows agriculture remains the largest contributor to economic activity in every province except Bagmati.

In Bagmati Province, wholesale and retail trade contribute the highest share of economic output, reflecting the province’s urban and commercial structure. Real estate services rank second in Bagmati.

Trade is also the second-largest contributor in Koshi and Madhesh provinces.

Meanwhile:

• Gandaki and Karnali rely significantly on public administration and defense, which rank as the second-largest contributors to their economies.
• Lumbini and Sudurpashchim see stronger contributions from administrative and support services.

Mining and quarrying remain among the least contributing sectors in Madhesh, Bagmati, and Karnali, according to the office.

Electricity and Gas Sector to Lead Growth

At the national level, the electricity and gas sector is projected to post the highest growth rate at an extraordinary 293 percent, reflecting rapid expansion in Nepal’s energy infrastructure and electricity output.

The same sector is expected to record the highest growth in Koshi, Madhesh, Bagmati, Gandaki, and Lumbini provinces.

In Karnali and Sudurpashchim, however, financial and insurance services are expected to grow the fastest.

The NSO also noted that some sectors are expected to experience negative growth.

Agriculture in Madhesh Province, and public administration and defense in Lumbini and Sudurpashchim, are projected to contract during the current fiscal year.

Per Capita Income Highest in Bagmati, Lowest in Madhesh

Nationally, per capita income is estimated at $1,513 for FY 2082/83, but disparities among provinces remain substantial.

Bagmati Province tops the ranking with an estimated per capita income of $2,644, nearly three times that of Madhesh Province.

Provincial per capita income estimates are:

The latest figures underscore Nepal’s persistent regional economic disparities, with Bagmati continuing to dominate in output and income while Madhesh lags behind in both economic growth and household earnings.