Himal Press 
KATHMANDU: Nepal’s economy is projected to accelerate to 5.1% in fiscal year 2024/25 compared to 3.9% in 2023/24, the World Bank said in its latest update.
Nepal’s growth will be driven by high tourist arrivals, along with increased hydropower and paddy production, according to the World Bank’s latest economic update, Nepal Development Update: International Migration and Well-being in Nepal, released on Wednesday.
“The private sector is expected to contribute to the country’s growth, as it is anticipated to benefit from the central bank’s loosening of monetary policy and easing of regulatory requirements. Nepal’s economy is projected to grow by 5.5 percent in 2025/26,” it added.
However, the report identifies multiple risks to the outlook, including heightened vulnerabilities in the financial system such as a rise in non-performing loans that may limit private sector credit growth, potential policy discontinuity that could deter investment, delays in the execution of the capital spending budget affecting infrastructure development, and regional instability and trade disruptions that could reduce tourism and domestic demand.
“Nepal’s economy is on a gradual recovery path,” Vice Chairman of the National Planning Commission, Dr. Shiva Raj Adhikari, said. “Our focus on enhancing capital expenditure, particularly by completing nearly finished projects, along with reforms in the budgetary process, will strengthen macroeconomic stability, boost domestic productivity, and create more jobs.”
Shocks in migrant-receiving countries such as the Gulf Cooperation Council countries and Malaysia, could also slow growth, impacting international remittances that are crucial for raising household consumption, reducing poverty, and developing human capital, the World Bank said in its flagship report.
“Maintaining growth momentum is key to Nepal’s development. This requires continued reform in critical areas such as infrastructure, governance human capital development, and developing an environment which encourages and supports the private sector,” World Bank Country Director for Maldives, Nepal, and Sri Lanka David Sislen, said, commenting on the report. “Nepal has greatly benefited from remittances from overseas workers and improving the management of these inflows, better supporting Nepalis who choose to seek work abroad, and also building a vibrant domestic economy which allows for skilled Nepalis to be productive in Nepal is critical to the future of the country.”
The Nepal Development Update, produced biannually, provides an in-depth analysis of significant economic developments over the past year, contextualizing them within a longer-term and global perspective.
