Kathmandu [Nepal], Oct 27 – Nepal’s manufacturing sector grew by just 0.86 per cent in fiscal year 2025/26, as 22 of the country’s 29 industry groups recorded lower production. Output also fell in the final quarter compared with the same period a year earlier, the first such decline in four years, according to the National Statistics Office (NSO).
The Manufacturing Production Index rose to 128.4 in FY 2025/26 from 127.3 in the previous fiscal year. However, the increase was driven mainly by higher production of vegetable oils and fats while most other industries saw a fall in output.
Vegetable oils and fats added around 3.1 points to the index, while all other industries combined reduced it by about 2.1 points.
Iron and steel, cement and other mineral products, plastics, beverages and tobacco were among the industries that recorded declines.
Pharmaceutical production was a bright spot, rising by around 10 per cent over the year. Production of lubricating oils and furniture also increased by 4.47 per cent and 5.09 per cent, respectively.
Other chemical products saw the biggest annual drop among the listed industries, with production falling 5.20 per cent. Tobacco production declined by 4.97 per cent and plastic products by 4.86 per cent.
Beverage production fell 3.95 per cent while textile production dropped 1.97 per cent. Output of basic iron and steel declined by 1.63 per cent while cement and other mineral products fell 1.52 per cent.
Grain mill products and other food products recorded small increases of 0.08 per cent and 0.53 per cent, respectively.
Manufacturing activity weakened further in the fourth quarter of FY 2025/26. The index fell to 126.5, down 3.69 per cent from the previous quarter and 1.03 per cent from the same period a year earlier.
The NSO said much of the quarterly fall was due to seasonal factors, as sugar mills do not operate in the fourth quarter. After accounting for this, the decline was about 0.9 index points.
However, the annual comparison showed wider weakness. As many as 24 of the 29 industry groups recorded lower production in the fourth quarter than in the same period last year.
It was the first time in four years that fourth-quarter manufacturing output fell below the level recorded a year earlier.
Nine industry groups make up about 78 per cent of the index. Steel accounts for 18.24 per cent, cement and other mineral products for 12.81 per cent, and grain milling for 11.12 per cent. Together, they make up about 42 per cent of the index.
The figures show that Nepal’s manufacturing sector recorded only modest annual growth with production falling across most industries and further weakness in the final quarter.
