World Bank's Projection: Nepal's Economic Growth Rate to Reach 5.1% in the Current Fiscal Year
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NEPSE trading
The World Bank has projected that Nepal's economic growth rate will improve to 5.1% in the current fiscal year 2025. The bank expressed confidence that the growth rate, which stood at 3.9% in the previous year (2024), will see an upward trend.
Growth Improvement:
Nepal's economic growth rate is estimated to reach 5.1% in 2025.
For the fiscal year 2026, the growth rate is projected to rise further to 5.5%.
Key factors contributing to this growth include an increase in tourist arrivals, hydropower production, and rice output.
Role of the Private Sector:
The Central Bank's flexible monetary policies and regulatory facilitation will play a crucial role in boosting the private sector.
The World Bank emphasized that the contribution of the private sector will be decisive in achieving this growth.
Economic Risks:
High-risk non-performing loans in the financial system may hinder private sector investment.
Other risks to the economy include delays in capital expenditure, policy instability, regional instability, and trade disruptions.
A potential decline in tourism and domestic demand could also pose challenges to the economy.
Impact of Migration and Remittances:
Shocks in the Gulf countries and Malaysia could affect international remittances, which play a significant role in consumption, poverty alleviation, and human capital development in Nepal.
Nepal's migration process is described as costly, unequal, and challenging.
Government Initiatives:
Dr. Shivaraj Adhikari, Vice Chairman of the National Planning Commission, emphasized prioritizing increased capital expenditure and encouraging domestic production to strengthen economic stability.
Nepal aims to improve its budgetary processes and expedite project completion.
World Bank's Recommendations:
World Bank Country Director David Sislen stressed the need for Nepal to focus on infrastructure development, good governance, human capital development, and private sector reform.
He also highlighted the importance of strengthening Nepal's migration management system, preparing workers better, and creating an environment to boost the productivity of skilled labor.
