KATHMANDU: The World Bank (WB) has projected Nepal’s economy to grow by 3.3% in Fiscal Year 2024, attributing the growth to the resurgence of tourism and an uptick in hydropower exports.

According to the WB’s twice-yearly country development update, private consumption is expected to be the main driver of growth, fueled by a significant rise in remittance inflows.

While the country’s economy is on a path of recovery, private investment remains low.

The WB anticipates a further rebound in growth, projecting it to reach 4.6% in FY25.

However, the forecast is subject to various risks, including a potential slowdown in partner countries such as India, Gulf countries, and Malaysia, which could result in reduced remittances and tourism.

To sustain medium-term growth, the WB emphasizes the need for business environment reforms aimed at attracting more private investment.

Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka, stressed the importance of strengthening capital expenditure implementation, boosting business confidence, and enhancing Nepal’s international competitiveness to stimulate economic growth and alleviate poverty.

The Nepal Development Update is part of the South Asia Development Update, which highlights the region’s economic developments and prospects.

The report underscores the importance of policies to promote firm growth, employment, trade openness, business climate improvement, financial sector reform, education enhancement, and women’s rights protection.

These measures are essential to unlock the region’s full economic potential and accelerate job creation and productivity growth.