Nepal is set to record highest economic growth in 23 years in the current fiscal year, according to the World Bank’s new estimates.
In its Nepal Development Update released on Thursday, the World Bank (WB) has projected that the growth will rebound strongly to 7.5 percent (market prices).
The projection is higher than the government’s growth estimate of 6.9 percent unveiled two weeks ago.
Best monsoon, increased availability of electricity, and greater investment as earthquake reconstruction gathered speed are the reasons behind such a robust growth preceded by low growth in the previous years, the multilateral donor said in the update.
“This cyclical rebound follows two challenging years where real GDP growth fell to 3.3 percent in the fiscal year 2015 due to devastating earthquakes and declined even further to a 14-year low of 0.4 percent in fiscal year 2016 due to a complete disruption in cross-border trade with India,” the update reads.
The WB has noted record rice production, progress in housing grants distribution and management reforms to eliminate power cut behind such a record achievement. “Rice production in the current fiscal year is estimated to have hit a record high of 5.2 million tons, up from 4.2 million tons a year ago. About half a million households, eligible to receive housing reconstruction grants, have received the first of the three tranches and second tranche payments have started and are expected to pick up by the end of the current fiscal year,” says the update.
Transportation has revived, while wholesale and retail trade have normalized, said the WB. “Tourism is also recovering with arrivals reaching pre-crisis levels during the September-December 2016 tourist season. Inflation has decelerated primarily due to the normalization of imports and moderating inflation in India as a result of demonetization,” the update reads.
Takuya Kamata, the World Bank’s Country Manager for Nepal said: “Government revenue and spending have performed well. Revenue has exceeded the six months’ target and spending, including on capital goods, has also significantly picked up compared to previous years and is on par with revenue.”