April 6: Nepal’s economy is likely to grow by 2.9 percent in the current fiscal year, according to the latest projection of the International Monetary Fund (IMF).
Releasing its World Economic Outlook (WEO) on Tuesday, the IMF slightly raised the growth forecast for Nepal from its earlier projection of 2.5 percent in October last year.
According to the projection made by the IMF’s flagship report WEO, Nepal’s economy will grow by 2.9 percent in the current fiscal year after an estimated contraction of 1.9 percent in the last fiscal year (FY 2019/20).
Nepal’s economy had grown by an average of 7.75 percent per year in the three-year period before the pandemic.
IMF has projected Nepal’s economy to grow by 4.2 percent in the next fiscal year, and the growth is expected to reach 5.2 percent in the Fiscal Year 2025/26.
Even when the country was under lockdown to contain the spread of coronavirus, the government in its annual budget speech had set an unlikely target of achieving 7 percent economic growth in the current fiscal year against all odds.
The IMF’s improved outlook for Nepal comes in line with a projection of stronger recovery of the global economy in 2021 and 2022 compared to its previous forecast.
According to the WEO, the global economy is projected to grow by 6 percent in 2021, up by 0.5 percentage points from its January forecast. The global economy is likely to grow by 4.4 percent in 2022 from an estimated historic contraction of -3.3 percent in 2020 when the world was hit by the Covid-19 pandemic, according to the IMF.
“Thanks to the ingenuity of the scientific community, hundreds of millions of people are being vaccinated and this is expected to power recoveries in many countries later this year,” Gita Gopinath, chief economist of the IMF, told a press briefing following the release of the WEO.
“Economies also continue to adapt to new ways of working despite reduced mobility, leading to a stronger than anticipated rebound across regions. Additional fiscal support in large economies, particularly the United States, has further improved the outlook,” she added.