World Bank reaffirms economic growth to limit at 0.6 per cent

 The World Bank (WB) reaffirmed its earlier projection of Nepal’s economic growth to be 0.6 per cent in the current fiscal year, though the government has – in the budget that it announced in June – projected a 7 per cent economic growth.

In October too, the development partner had projected Nepal’s economic growth to be remain 0.6 per cent in the fiscal year 2020-21. “The low growth rate is due to the economic impacts of the Covid-19 pandemic in the economy that depends heavily on tourism and travel,” the Global Economic Prospects released today reads, adding that the growth for the next fiscal year could be 2.5 per cent. “The tourism revenue is likely to remain significantly below pre-pandemic levels because of depressed demand as potential tourists remain wary of social interactions and continued restrictions on international travel, although recent vaccine news offers hope.”

With this reason, the recovery is likely to remain modest, it adds.

According to Global Economic Prospects, the South Asian region is projected to grow by 3.3 per cent in 2021. “Weak growth prospects reflect a protracted recovery in incomes and employment, especially in the services sector; limited credit provisioning constrained by financial sector vulnerabilities, and muted fiscal policy support,” it reads, adding that the forecast assumes that a vaccine will be distributed on a large scale in the region starting the second half of 2021 and that there is no widespread resurgence in infections. “In South Asia, Maldives could log the highest economic growth as it has opened up for tourism.”

According to World Bank, the global economy contracted by 4.3 per cent in 2020. But the global economy could expand by 4 per cent in 2021 given that an initial Covid-19 vaccine rollout becomes widespread throughout the year.