October 3: The World Bank has projected Nepal’s economic growth to be 3.9% in the current fiscal year 2023/2024.
This projection hinges on the removal of import restrictions, a revival of the tourism sector, and an expansion of the monetary policy aimed at stimulating the economy.
In contrast, the budget for the fiscal year 2023/2024 has set the target of achieving 6% economic growth. In the last fiscal year, Nepal's economic growth was only 1.9 percent.
While the agriculture and industrial sectors may see some growth in the current fiscal year, it is the service sector that is poised to make a significant contribution to Nepal's economic upswing.
The agriculture sector is projected to grow at 2.1 percent, and the industrial growth rate is estimated at 3.2 percent. Likewise, the service sector is expected to grow at a satisfactory rate of 5.1 percent.
Nayan Krishna Joshi, an economist affiliated with the World Bank, said that the institution's growth projection considered the lingering impact of the lumpy skin epidemic in Nepal.
However, the World Bank has also issued cautionary notes regarding potential risks. These include the specter of decreased agricultural production due to fluctuations in the monsoon, inflationary pressures, and the consequences of import restrictions imposed by India.
According to the World Bank's semi-annual report, which was unveiled on Tuesday, Nepal is poised to achieve a 5 percent economic growth rate in the upcoming fiscal year 2024/2025.
World Bank has set a higher target for inflation in the current fiscal year than the central bank. The central bank has set a target of 6.5 percent, while the World Bank's projection is 7.5 percent. In the previous fiscal year, inflation stood at 7.8 percent.
In the last fiscal year, both production and construction sectors contracted. Similarly, wholesale and retail sectors within the service sector also faced shrink.