Economy to grow by 3.9 per cent: World Bank

The World Bank (WB) has projected that the Nepali economy will grow by 3.9 per cent in the current fiscal year, an improved average from 2020-21, as theh country is lifting containment measures due to vaccination picks up and tourism and migrant worker flow recover.

A week ago, the Asian Development Bank (ADB) revised its projection for Nepal to 4.1 per cent from earlier 5.1 per cent, though the government, through its replacement budget has targetted to achieve some 7 per cent economic growth.

Unveiling its latest South Asia economic focus, 'Shifting Gears: Digitisation and Services-Led Development,' today, the multilateral development partner attributed an improved economic growth largely to an expansion of the services sector.

In Nepal, the pandemic has accelerated the growth of digital services, with the use of electronic payment transactions increasing by double digits, the report reads, adding that the growth in the service sector as a whole is expected to drive Nepal’s recovery, despite structural constraints like slow domestic job creation, the country’s high vulnerability to natural disasters and climate change, and large infrastructure gaps.

The World Bank country director for the Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos said that the pandemic provides an opportunity for a number of South Asian countries to craft a recovery path that draws lessons from the crisis. He also praised Nepal for stepping up for green development.

"Nepal has recently adopted the Kathmandu Declaration as a joint commitment of the government and development partners towards the country’s Green, Resilient and Inclusive Development (GRID)," he said, adding, "mobilising the private sector through green investment and support for small and medium enterprises with job growth potential in the services sector is a key part of Nepal’s GRID strategy."

According to the World Bank, in South Asia, recovery continues as global demand rebounded and targeted containment measures helped minimise the economic impacts of the recent waves of Covid-19. But the recovery remains fragile and uneven, and most countries are far from pre-pandemic trend levels. "In Nepal, recovery is vulnerable to risks, and will rely on the continued gradual resumption of economic activities alongside social distancing and an effective vaccination rollout this year," it adds.