KATHMANDU: Economic Digest (weekly) offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The World Bank has projected a growth rate of 5.1% for FY 2025, up from 3.9% in FY 2024, driven by increased tourist arrivals, hydropower production, and better paddy yields, despite potential risks from financial vulnerabilities and regional instability.
In the stock market, NEPSE experienced a decline of 26.07 points amid volatility, while gold prices rose to Rs 160,800 per tola, indicating trends in precious metal demand.
Additionally, commercial banks lowered their base interest rates, reflecting an excess of loanable funds.
The tourism sector remains robust, with over 800,000 visitors recorded in 2024, although Indian arrivals dipped due to the monsoon.
Additionally, the Hotel Association Nepal has established a relief fund for families affected by recent floods and landslides, demonstrating community support in times of crisis.
Nepal’s economy set to grow 5.1 percent in FY 2025
Nepal’s economy is projected to grow by 5.1 percent in FY 25, an increase from 3.9 percent in FY 24, according to the World Bank’s latest report. This growth is anticipated to stem from rising tourist arrivals, enhanced hydropower production, and improved paddy yields.
The private sector is expected to significantly contribute to this growth, aided by the central bank’s easing of monetary policy. However, the report highlights potential risks, including vulnerabilities in the financial system, policy discontinuity, delays in capital spending, and regional instability that could hinder tourism and domestic demand.
The report also points out that shocks in migrant-receiving countries could affect remittances, vital for consumption and poverty reduction.
NEPSE drops 26.07 points amid market volatility
The Nepal Stock Exchange (NEPSE) on Wednesday witnessed a decline of 26.07 points, closing at 2,597.49, following a significant increase of 114.70 points the day before.
This drop of 0.99 percent reflects the market’s inherent volatility, as it opened at 2,629.73 points, briefly surged to a peak of 2,643.76, before tumbling to a low of 2,582.72 during the trading session.
A total of 310 stocks were traded, resulting in 83,081 transactions and a turnover of Rs. 6.77 billion.
This fluctuation in the index highlights investor caution and market reactions to prevailing economic conditions, suggesting a potential consolidation phase after the previous day’s gains.
Gold price surges in Nepali market
Gold prices in the domestic market increased by Rs 800 on Wednesday, reaching Rs 160,800 per tola, according to the Federation of Nepal Gold and Silver Traders.
This marks a rise from the previous day’s price of Rs 160,000 per tola. Additionally, silver prices also saw an uptick, climbing by Rs 10 to reach Rs 1,935 per tola.
The simultaneous increase in both gold and silver suggests a broader trend in precious metal markets, possibly influenced by factors such as demand fluctuations or global economic conditions.
Banks’ base interest rate drops
Nepal’s commercial banks have lowered their base interest rate to 7.69% for mid-September to mid-October, down from 7.92 percent, due to an excess of loanable funds.
This reflects a reduction of 0.22 percentage points from last month’s drop of 0.25 points.
Among the 20 banks, Standard Chartered offers the lowest rate at 6.03 percent, while Rastriya Banijya Bank follows at 6.37 percent, down from 6.22 percent.
In contrast, NIC Asia Bank has the highest rate at 9.06 percent, reduced from 9.22 percent, and Kumari Bank’s rate is now 8.46 percent, down from 8.90 percent.
Nepal witnesses 800,000 tourist arrivals in first nine months of 2024
In the first nine months of 2024, Nepal welcomed over 800,000 foreign tourists, with a total of 816,339 visitors recorded, marking a 6% increase compared to 2023 and a 4% rise from 2019, according to the Nepal Tourism Board.
Maniraj Lamichhane, Director at the NTB, noted these positive trends, although September saw a decline in Indian tourist arrivals relative to August, likely due to the monsoon season.
Conversely, there was an uptick in tourists from China, indicating shifting patterns in travel preferences.
This mixed data underscores the resilience of Nepal’s tourism sector while also highlighting seasonal challenges and the need to attract diverse visitor demographics.
HAN sets up relief fund to disaster-hit people
Hotel Association Nepal (HAN) has set up a relief fund for the families affected by the floods and landslides due to the recent rains in various parts of the country, HAN statement said.
“The Association established a relief fund with an aim of helping the affected people and the amount collected in the fund will be transferred through the government as soon as possible,” a press release reads.
(Prepared by Srija Khanal)
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