KATHMANDU: In the current Fiscal Year 2021/22, Nepal’s economic growth rate is projected to be confined to 3.9 percent.
Releasing the Asian Development Outlook 2022 on Wednesday, the Asian Development Bank (ADB) made the projection that Nepal’s growth will be limited to 3.9 percent.
This ADB projection is in line with the World Bank projection.
Interestingly, the Government of Nepal has projected an economic growth rate of 7 percent in the budget. However, the government’s second projection has not been made public. Finance Minister Janardan Sharma has already admitted that the target will not be achieved.
ADB’s Outlook is the main financial publication covering ADB’s macroeconomic update.
ADB report remarked that the remarkable success on vaccination campaign against the pandemic and the rise of economic activities have been the positive factors in the economic sector.
However, the global economic slowdown caused by the Ukraine-Russia war, stagnant trade flows, crude oil and other commodity prices have weighed on inflation, the ADB said.
ADB stated that these international factors there will add pressure on Nepal’s balance of payments and foreign exchange reserves.
Paddy production was expected to be good due to heavy rains in the previous monsoon season. However, unseasonal rains and floods in mid-October damaged crops. It also reduced paddy production by 9 percent, according to the ADB.
Based on consumer and investment demand, industry growth is projected at 4.1 percent this year. Wholesale and retail trade, transportation and financial services are expected to grow by 5.2 percent as normal conditions prevail.
The tourism sector is expected to see the better days this year.
In South Asia, Nepal and Sri Lanka are expected to have a weaker economic growth than other countries.
According to ADB, Sri Lanka, which is at the bottom, will achieve only 2.4 percent economic growth. The Maldives will achieve the highest economic growth rate of 11 percent. India is projected to grow at 7.5 percent.