By Our Reporter
The lockdown imposed to contain the virus has become costly for Nepal’s economy. Many people have lost their jobs as many businesses and industries failed to survive the lockdown. The latest economic indicators present a bleak picture of the national economy. It is also evident from the latest growth projection of the Asian Development Bank. According to the latest Asian Development Outlook (ADO) 2020 Update, a publication of the Asian Development Bank (ADB), Nepal’s economy is anticipated to grow by 1.5 per cent in fiscal year 2020/21 from the preliminary estimate of 2.3 per cent.
A decline in exports, remittances, and tourist income, and the stringent measures to contain the effects of the COVID-19 pandemic, even as the lockdowns have gradually eased, would contribute to further slump in the economy.
After strong growth in recent years, Nepal is going to have poor economic growth for the second year in a row due to the COVID-19 pandemic, it said.
“Expected sharp economic downturn in neighbouring India, Nepal’s predominant trade partner, will also dent Nepal’s growth prospects,” said ADB Country Director for Nepal MukhtorKhamudkhanov. “Growth may decline further if the containment period prolongs with periodic lockdowns in major hotspots and consequent restrictions in economic activities through this fiscal year.”
According to the latest Nepal Macroeconomic Update leased on Tuesday, agriculture growth may rise as paddy yield is expected to increase on the back of normal monsoon. Nonetheless, delay in timely procurement of fertilizers may dampen potential agriculture growth.
Industrial output will diminish reflecting a contraction in manufacturing and slowdown in construction. Service growth will be significantly lower with sluggish trade and as international tourism remains largely closed for the time being.
The Update projected inflation to moderate to an average of 5.5 per cent in FY2021, down from 6.2 per cent in FY2020, assuming a good harvest, modest oil prices, and subdued nonfood prices on weak domestic demand.
The current account deficit is expected to widen from -0.9 per cent of gross domestic product in FY2020 to -1.9 per cent a year later as import growth marginally picks up and remittance inflows decline to owe to a slowdown in global demand from this crisis.
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