September 3: Nepal’s GDP growth rate in the new fiscal year (2015/16) will largely depend on the scope and pace of post-earthquake reconstruction work, and it is likely to hover around 4.5 to 5.5 percent, the Asian Development Bank has said.

The bank has identified adverse political situation and slow capital budget execution as the two downside risks that could lower growth forecast.

The bank, in its Macroeconomic Update, has envisages two scenarios for Nepal’s economy, and forecasted growth of 4.5 percent and 5.5 percent for each scenario. The government in its budget for 2015/16 had forecasted the growth to be around 6 percent.

Nepal’s GDP will grow by 4.5 percent if there is marginally better rainfall, modest pickup in actual implementation of reconstruction projects through the National Reconstruction Authority, gradual normalisation of political scenario, continuation of previous trend in spending capital budget, modes recovery of tourism related activities and slightly better service sector growth, says the bank.

The ADB has forecasted a growth of around 5.5 percent if there is slightly better rainfall and adequate paddy plantation in the main paddy plantation belts, robust pickup in manufacturing and construction activities propelled by accelerated spending by the NRA and improved capital budget execution by the ministries, normalisation of political scenario, and robust services sector performance.