Industry, service sector lift Nepal's growth: ADB

Robust growth in industry and services lifted growth prospects for Nepal in fiscal 2016-17, as did accelerated earthquake reconstruction, according to the Asian Development Outlook (ADO).
Asian Development Bank (ADB) – unveiling Asian Development Outlook – has said economic outlook for South Asia remains robust, with growth on track to meet projections made in Asian Development Outlook 2017 of 7 per cent for 2017 and 7.2 per cent for 2018.
Agriculture growth in Bangladesh in fiscal year 2016-17 was higher than anticipated, it reported, adding that services growth also outperformed expectations, supported by agriculture growth and solid performances in wholesale and retail trade, real estate, hotels and restaurants, and transport.
In Pakistan, growth was similarly supported by a revival in agriculture, as well as by continued expansion in construction and steady growth in services. Strong private consumption remained the largest contributor to growth.
These improved prospects for Nepal, Bangladesh, Maldives and Pakistan are balanced by slower growth projected for Bhutan and Sri Lanka, the report reads.
The construction of hydropower projects has been delayed in Bhutan, undermining economic growth there. In Sri Lanka, heavy rain caused severe floods in 15 of 25 districts and triggered landslides in some areas in May. Disrupted economic activity and damage to agriculture will slow growth in 2017, but subsequent recovery may boost GDP growth somewhat in 2018.
In India, economic growth slowed to 7.1 per cent in fiscal year 2016-17 – ended on March 31 – from eight per cent in previous fiscal. “The slowdown can be partly attributed to demonetisation and replacement of high-denomination banknotes in November 2016, which affected economic activity in several cash-dependent sectors,” ADB report reads. "India – the sub-region’s largest economy – is expected to achieve previous growth projections of 7.4 per cent in 2017 and 7.6 per cent in 2018, primarily from strong consumption."
Meanwhile, developing Asia is now expected to grow by 5.9 per cent in 2017, or 0.2 percentage point higher than the rate previously envisaged. The smaller upgrade in the 2018 growth forecast – 5.7 per cent in ADO 2017 to 5.8 per cent – reflects a cautious view on the pace of the turnaround in external demand.
“Developing Asia is off to a good start this year with improved exports pushing growth prospects for the rest of 2017,” said ADB’s chief economist Yasuyuki Sawada. “Despite lingering uncertainties surrounding the strength of the global recovery, we feel that the region’s economies are well-placed to face potential shocks to the outlook.”
Excluding the newly industrialised economies of Republic of Korea, Singapore, Taipei, China, and Hong Kong, China, growth projections for the region are revised up to 6.4 per cent for 2017 and to 6.3 per cent for 2018. Projections are upgraded for Central and East Asia.
Likewise, the combined growth forecast for the major industrial economies – the US, the euro area, and Japan – has been retained from ADO 2017.
Economic growth prospects in developing Asia for 2017 have improved on the back of stronger-than-expected export demand in the first quarter of this year, according to the report.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members, 48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in co-financing.