ADB forecasts Nepal’s economic growth to slow to 2.7%

KATHMANDU: The Asian Development Bank (ADB) has forecast Nepal’s economy to grow by 2.7% in fiscal year 2025/26, down from 4.6% in the previous fiscal year.

Unveiling the April edition of Asian Development Outlook (ADO) in Kathmandu on Friday, April 2026, ADB Country Director for Nepal said Nepal’s economic growth will slow significantly in the current fiscal year amid political uncertainties, including last year’s civil unrest and the conflict in the Middle East. “While renewed political stability is expected to support reforms and bolster economic confidence, substantial downside risks remain, particularly from the Middle East conflict, which is affecting oil prices, tourism, and remittance flows,” he added.

ADB expects GDP growth to climb to 5% in 2026/2027 as the effects of recent shocks fade, leading to stronger domestic demand, hydropower exports, and tourism.

According to the ADB’s flagship publication, inflation is projected at 3.7% in the current fiscal year and to further rise to 4.5% in 2026/27, driven by expected stronger domestic activities under the early stabilization scenario.

“The outlook remains subject to very high uncertainty and substantial downside risks. These include a prolonged Middle East conflict, weak capital budget execution, financial sector vulnerabilities, and climate-related hazards,” the ADB said in its report. “There are elevated risks from global oil price volatility and potential weakness in Gulf Cooperation Council (GCC) countries-linked remittances in case of a prolonged conflict.”

Earlier this week, the World Bank projected Nepal’s growth to slow to 2.3% in the current fiscal year.

World Bank projects Nepal’s growth to slow to 2.3% in 2025/26