The World Bank has pointed out five major risks to the economic outlook of Nepal including reform implementation constraints and vulnerability to natural disasters.
Releasing a new report for its regional economic update today, the World Bank said that the economic growth of Nepal is projected to grow by 6 per cent in the current fiscal year 2018-19.
While saying that the growth is likely to be strong in the mid-term, the periodic report has also highlighted five key risks for the outlook. These risks include slow implementation of reforms to increase private investment, especially foreign investment, limited resources and capacity to support federalism and local service delivery, and constraints on credit as banks limit lending to meet the credit to core capital plus deposit (CCD) ratio regulatory limit, according to the report.
Similarly, other risks to the growth identified in the report are adverse effects of natural disasters and shocks to remittance inflow. “The poverty outlook is especially sensitive to remittance inflows, natural disasters and local level implementation capacity constraints that may hamper service delivery,” reads the report.
Against the backdrop of implementation of federalism, the report has also found the capacity to sustain service delivery and establish fiscal discipline, particularly at the local levels, a major challenge to the growth prospect.
“The transfer of financial management staff over a year ago made it possible for local governments to prepare budgets and receive fiscal transfers of 8 per cent of GDP in fiscal year 2018-19," The report further stated adding that under-spending of the budget however persists.
The report’s growth forecast of 6 per cent in the current fiscal year is, however, lower than the recent Asian Development Bank (ADB) projection of 6.5 per cent, International Monetary Fund (IMF) 6.5 per cent and the government’s own target of 8 per cent.
“In Nepal, GDP growth is projected to average 6 per cent over the medium term," the report reads, adding that the services sector is forecast to benefit from strong tourism, and manufacturing will be supported by the opening of Nepal’s largest cement factory next year. "We anticipate the ‘strong’ growth to continue to drive significant poverty reduction."
Nepal is bracing for over 6 percent growth for the third consecutive year. In the fiscal year 2017-18, the growth is estimated to reach 6.3 per cent, compared to 7.9 per cent in the previous fiscal year.
Meanwhile, the report, which has focused this time on how South Asia can boost its exports to maintain growth, also calls for increasing the region’s exports to sustain its high growth and reach its full economic potential.
“South Asia’s exports performance has dropped in the last few years to languish at far below its potential and while growth still looks robust, we are concerned about whether this can hold up over the longer term,” a press statement issued after the release of the report quoted World Bank vice president for the South Asia Region Hartwig Schafer, as saying. “To ensure growth in the long run, the region needs to integrate further into international markets to sustain its upward growth trajectory, create more jobs, and boost prosperity for its people," the twice-a-year regional economic update states.
Releasing a new report for its regional economic update today, the World Bank said that the economic growth of Nepal is projected to grow by 6 per cent in the current fiscal year 2018-19.
While saying that the growth is likely to be strong in the mid-term, the periodic report has also highlighted five key risks for the outlook. These risks include slow implementation of reforms to increase private investment, especially foreign investment, limited resources and capacity to support federalism and local service delivery, and constraints on credit as banks limit lending to meet the credit to core capital plus deposit (CCD) ratio regulatory limit, according to the report.
Similarly, other risks to the growth identified in the report are adverse effects of natural disasters and shocks to remittance inflow. “The poverty outlook is especially sensitive to remittance inflows, natural disasters and local level implementation capacity constraints that may hamper service delivery,” reads the report.
Against the backdrop of implementation of federalism, the report has also found the capacity to sustain service delivery and establish fiscal discipline, particularly at the local levels, a major challenge to the growth prospect.
“The transfer of financial management staff over a year ago made it possible for local governments to prepare budgets and receive fiscal transfers of 8 per cent of GDP in fiscal year 2018-19," The report further stated adding that under-spending of the budget however persists.
The report’s growth forecast of 6 per cent in the current fiscal year is, however, lower than the recent Asian Development Bank (ADB) projection of 6.5 per cent, International Monetary Fund (IMF) 6.5 per cent and the government’s own target of 8 per cent.
“In Nepal, GDP growth is projected to average 6 per cent over the medium term," the report reads, adding that the services sector is forecast to benefit from strong tourism, and manufacturing will be supported by the opening of Nepal’s largest cement factory next year. "We anticipate the ‘strong’ growth to continue to drive significant poverty reduction."
Nepal is bracing for over 6 percent growth for the third consecutive year. In the fiscal year 2017-18, the growth is estimated to reach 6.3 per cent, compared to 7.9 per cent in the previous fiscal year.
Meanwhile, the report, which has focused this time on how South Asia can boost its exports to maintain growth, also calls for increasing the region’s exports to sustain its high growth and reach its full economic potential.
“South Asia’s exports performance has dropped in the last few years to languish at far below its potential and while growth still looks robust, we are concerned about whether this can hold up over the longer term,” a press statement issued after the release of the report quoted World Bank vice president for the South Asia Region Hartwig Schafer, as saying. “To ensure growth in the long run, the region needs to integrate further into international markets to sustain its upward growth trajectory, create more jobs, and boost prosperity for its people," the twice-a-year regional economic update states.
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