Economy to moderately grow by 5.1 per cent

The World Bank has projected Nepal’s economy to grow by 5.1 per cent in the current fiscal year 2022-23, whereas it will grow by 4.9 per cent in the next fiscal year 2023-24.

The World Bank’s projection is lower than the government’s target of 8 per cent, whereas higher than Asian Development Bank’s (ADB) projection of 4.7 per cent.

Issuing its latest update ‘Global Economic Prospect Report’ today, the multilateral development partner projected that Nepal’s economic growth will be fourth among the South Asian nations. “In South Asia, the Maldives, India and Bangladesh have higher growth forecasts than Nepal with 8.2 per cent, 6.9 per cent and 5.2 per cent, respectively, whereas Bhutan and Pakistan are below Nepal with 4.1 per cent and 2 per cent, respectively,” according to the World Bank. “Sri Lanka is projected to have a negative growth rate of -4.2 per cent.”

The World Bank has also estimated 5.8 per cent economic growth in the last fiscal year 2021-22.

According to the report, growth in South Asia Region (SAR) is projected to slow to 5.5 per cent in 2023, from 6.1 per cent the previous year, on slowing external demand and tightening financial conditions, before picking up slightly to 5.8 per cent in 2024. “Growth is revised lower over the forecast horizon and is below the region’s 2000-19 average growth of 6.5 per cent,” it claims, adding that this pace reflects still robust growth in India, Maldives, and Nepal, offsetting the effects of the floods in Pakistan and the economic and political crises in Afghanistan and Sri Lanka. “South Asia continues to be adversely affected by spillovers from the invasion of Ukraine, rising global interest rates, and weakening growth in key trading partners.”

Likewise, the World Bank also claimed that global economic growth rate would be squeezed to 1.7 per cent in the year 2023 which is 1.3 per cent lower than the earlier estimate. 

Six months before or in the month of June this year, it had made public an estimation of global economic growth rate of 3 per cent. In the year 2024, the global economic growth rate would remain 2.7 per cent, it claims, adding that the ongoing war between Russia and Ukraine and Covid pandemic has been considered the main causes behind the lower economic growth rate. “High price hike, high interest rate and disruption in the supply chain have been identified as other causes behind the fall in the economic growth rate.”

The estimation of economic growth rate for the year 2023 is the third big recession in the last three decades,” it adds.