KATHMANDU: Nepal’s economy is projected to slow down to 5.3 percent in the current fiscal year. The economic growth rate stood at around 7.1 percent last year owing to high agricultural yields, a rise in tourists’ arrival and increment in remittance flow as well as spurt in the investment from the private sector.
It is estimated that the economic growth rate will see slowdown due to the prevalence of nationwide lockdown enforced to suppress the spread of COVID-19 pandemic and reduction in production, service sector and remittance inflow.
According to the ‘Asian Development Outlook’ released by the Asian Development Bank at Manila today, average annual price inflation would see a 6 percent increase in the current fiscal year due to disruption in production and supply chain resulting from the pandemic.
In the first seven months of the fiscal year, consumer price inflation of consumable goods and energy would increase to 6.5 percent from 4.,2 percent in the corresponding period of the previous year. The price inflation is further likely to go to an upward trend due to the effects of a pandemic.
In the first seven months of the current fiscal year 2076-77 BS (2019-20), the trade deficit (goods) reduced by 4.9 percent compared to the 15 percent extension in the previous fiscal year.
The reduction in the size of trade deficit was a result of the increase in export with the encouraging export of palm oil and black cardamom to India and a fall in the import of construction materials, motor vehicles and petroleum products.
The improved trade sheets had helped keep the current account deficit at one billion dollars till mid-February of the current fiscal against 1.5 billion dollars of the corresponding period previous fiscal year. Due to a fall in the import of petroleum products and capital and consumer goods, the deficit is predicted to slow down to 5.4 percent from 7.7 percent of the Gross Domestic Product of the fiscal year 2075-76 BS ( 2018-19).
However, the size of the current account deficit is likely to get enlarged if there is a slip in remittance in the last quarter of the current fiscal year.
The ADB’s forecast is that Nepal’s GDP in the upcoming fiscal year will be measured at 6.4 percent as it estimates that the COVID-19 crisis will end soon, paving a way for the operation of economic activities smoothly and monsoon will be at its normal pace.
The ADB has expected completion of 456 megawatts Upper Hydropower Project by fiscal year, 2077/78 and commercial operation of under-construction Gautam Buddha International Airport.
Average annual inflation in the fiscal year 2077/78 ( 2020-21) is expected to remain at 5.5 percent based on expectations that turbulent situations caused by coronavirus would return to normalcy, agricultural products increase, prices of petroleum products decrease and general increment in India’s inflation, the report said.
Gross Domestic Product is expected to increase from 5 percent to 5.6 percent following an increment in capital goods import and there would be a decrement in the price of petroleum products and an increment in the export of electricity to India, according to the report.
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