Further decline in credit quality at banks, rapid turnover of staff
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The World Bank has projected the economic growth rate of Nepal to be 4.5 percent in the fiscal year 2081/82. This is 0.6 percentage points higher than last financial year 2080/81. In the last fiscal year, the economic growth rate of the country was 3.9 percent.
According to the World Bank, there is a possibility of some improvement in the economic growth rate even if major natural disasters such as severe floods and landslides occur in the country towards the end of 2024.
The 'Nepal Development Report: Leveraging the benefits of entrepreneurship to boost economic growth and implementation of reforms' published by the World Bank on Thursday has predicted an improvement in economic growth this year compared to last year.
The report said that the economic growth will improve mainly due to the increase in domestic trade, hydropower and rice production this year. According to the report, in the next two financial years (2082/83 and 2083/84), the economy of Nepal is expected to achieve an average economic growth rate of 5.4 percent. It is said that the impact of the information technology sector will be significant in the service sector as well.
It is imperative that Nepal promotes private sector-led economic growth to create the jobs it needs. To achieve this, Nepal needs to implement major structural reforms, building on its impressive history of resilience growth,” said David Sislen, World Bank Country Director for Maldives, Nepal and Sri Lanka. The
report also points to potential risks (dwindling investment due to lower expected returns) in Nepal's economic landscape, including geopolitical and trade uncertainties. It is also mentioned in the report regarding the possibility of further decline in credit quality in Nepal's financial sector, as well as the risk of policy inconsistency caused by the government's frequent transfer of employees and the delay in the implementation of the capital budget.
National Planning Commission Vice Chairman Shivraj Adhikari said that effective capital budget implementation and timely completion of current projects are necessary as economic growth needs to be strengthened to achieve Nepal's 16th plan goals.
The Nepal Development Report provides important insights into recent economic developments and highlights Nepal's buoyant economic growth. Nepal Development Update is a report published twice a year. It provides a detailed analysis of the major economic developments of the previous year, placing them in a long-term global context.
The National Statistics Office has predicted that the country's economic growth rate will be 5.1 percent in the second quarter of the fiscal year 2081/82. The office's second quarter gross domestic product (GDP) report has projected an economic growth of more than five percent. The office said that the economic growth of more than five percent in the second quarter of this year is due to the increase in the transport and construction sectors, the increase in agricultural production, the increase in electricity production and distribution, and the improvement in the total value added of financial intermediation.
Out of the 18 sectoral classifications of the economy, all of them had a solid growth rate in this quarter, according to the data of the office. "Especially during this period, it is estimated that the growth rate of the economy will remain normal as there was no significant growth in the education, accommodation and food and other service sectors," the report said.
