Economic slowdown takes its toll on manufacturing sector: NRB

KATHMANDU, Dec 29: As the country is reeling under an economic slowdown, the production capacity of factories operating in Lumbini Province has shrunk by 5.54 percent.

A study report unveiled by Nepal Rastra Bank (NRB) shows that the factories were operating in 50.82 percent of their total capacity as of fiscal year 2022/23, down from 56.36 percent in the fiscal year 2021/22. The manufacturing sector was adversely affected by the economic recession that the country has been facing for over a year.

According to the NRB, the aggregate demand of the country has largely fallen over the period mainly due to a decline in the purchasing power of the people caused by the lack of employment. There has been a massive drop in economic activities including the construction related works.

The economic situation has taken its toll largely on production sectors related to the manufacturing of electrical accessories, wheat flour, edible oil, iron rod and related products and medicinal products. Due to a notable rise in the price of raw materials, the production of synthetic textile declined by 38.88 percent.

The production of aluminum products declined by 29.42 percent, mustard oil by 20.21 percent and wheat flour by 21.36 percent.  

The manufacturers of alcoholic beverages, utilizing 85.76 percent of their capacity, were the highest performers. The manufacturers of dry syrup medicine were the least with utilization of 5.84 percent of their capacities.

Likewise, the manufacturers of cement, animal fodders, concrete, aluminum, papers, plastic products, plywood and rosin were among the performers above average capacity users.

In the review period, the production of papers increased 32.14 percent in the province. Rosin production increased 30.59 percent, while the demand for soap also increased 22.25 percent.  

 
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