Nepal Rastra Bank Admits Growth Target Unattainable in FY 2025/26

Nepal Rastra Bank has acknowledged that the country will fail to achieve its targeted economic growth in the current fiscal year 2025/26, citing delayed monsoon rains and flood- and landslide-related damage to agriculture and other sectors.

In its first-quarter monetary policy review, the central bank said late monsoon onset followed by heavy rainfall during the crop-planting season disrupted agricultural production and affected overall economic activity.

“Overall, preliminary estimates indicate that economic growth in the current fiscal year will remain somewhat below the target,” the review stated.

The government had set a 6 percent economic growth target for this fiscal year. Last month, the World Bank also projected a sharp slowdown in Nepal’s growth. This marks the first time a government agency has formally admitted that the growth target is unlikely to be met this year.

The World Bank, in its latest Nepal Development Update, attributed the slowdown largely to the Gen Z movement and the political instability it triggered, projecting Nepal’s economic growth at 2.1 percent for the current year.

During the Gen Z movement in early September, both public and private infrastructure sustained significant damage, mainly affecting the services sector and weakening overall economic performance. The World Bank also warned of a sharp drop in international tourist arrivals, a steep decline in tourism activities, and potential adverse impacts on the insurance sector due to widespread property damage.

However, Nepal Rastra Bank said that despite damage to some hotels during the protests, tourists remain confident about the country’s overall security situation, leading to an increase in foreign tourist arrivals.

According to the Nepal Tourism Board, 1,060,269 foreign visitors arrived in Nepal by November 2025, representing a 0.4 percent increase compared to the same period last year.