By Our Reporter
Two separate reports made public on Tuesday have claimed new predictions regarding Nepal’s economy. In its latest review, the World Bank has projected that Nepal’s economy would rebound by 3.3 per cent in the current fiscal year 2023/24 driven by revived tourism and a pickup in hydropower exports.
Likewise, in its preliminary estimation, the National Statistics Office (NSO) has predicted a 4 per cent growth in the gross domestic product at the constant price in the second quarter of the current fiscal year 2023/24.
The latest Nepal Development Update of the World Bank states Nepal’s economy is on a recovery path, but private investment remains low. It projects a further rebound in growth of 4.6 per cent in the fiscal year 2024/25.
However, the forecast is subject to multiple risks, including a growth slowdown in partner countries, notably India, Gulf countries and Malaysia which could lead to a drop in remittances and tourism.
Further business environment reforms aimed at attracting more private investment will be needed to support medium-term growth.
“Strengthening the implementation of capital expenditure, boosting business confidence, and strengthening Nepal’s international competitiveness is key to stimulating economic growth and reducing poverty,” said Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka.
The Nepal Development Update is prepared in parallel with the South Asia Development Update, a twice-a-year World Bank report that examines economic developments and prospects in the South Asia region and analyzes policy challenges countries face.
The April 2024 edition titled Jobs for Resilience shows growth in South Asia is again higher than any other emerging market and developing country region in the world, projected at 6 per cent in 2024 and 6.1 per cent in 2025.
But this strong outlook is deceptive, said the report.
For most countries, growth is still below pre-pandemic levels and is reliant on public spending.
In the seasonally unadjusted quarterly Gross Domestic Products (GDP) report made public on Tuesday, the NSO estimated an increase of 4 per cent in gross domestic product in the second quarter of the current fiscal year as compared to the corresponding quarter of the previous fiscal year.
The positive growth of the economy this quarter is attributed to the increase in paddy and other agricultural products and the rising tourism arrivals along with the increase in the total value added of the hotel sector.
In addition, due to the slight growth in the trade sector and the positive growth of other sectors except industry, the overall economy is heading to a positive growth, said the report.
In the sectoral comparison between the second quarter of the current fiscal year 2023/24 and the second quarter of the previous year 2022/23, out of the total 18 industrial classifications of the economy, the total value-added growth rate of 17 industrial sectors has been positive.
As per the estimation of the NSO, the activity related to the accommodation and food service sector has the highest growth rate of 29.3 per cent while the electricity and gas sector is the second highest-growing industrial sector with a growth rate of 17.1 per cent.
Likewise, the transport and storage sectors accounted for 14.3 per cent growth during the review period.
Similarly, the growth rate of value added in the mining and quarrying sector is estimated to be 9.4 per cent.
Along with the increase in deposits and loans, the growth rate of the financial and insurance sectors is 9.1 per cent during the review period.
The NSO estimated that the growth rate of the agriculture, forestry and fisheries sectors, whose contribution was the highest to the economy during this period, will be 3 per cent during the second quarter of the current fiscal year.
Due to the decline in the import of commercial goods, the growth of the business sector has not been satisfactory., it said.
The production of six sectors, however, was negative during the review period.
It estimated that the total value added in the electricity and gas supply sector would increase by 9.3 per cent.
Following the sectors, the transport and storage sector accounted for 6.5 during the review period.
The value-added growth rate of the agriculture, forestry and fisheries sector will be 2.6 per cent during the second quarter of the current fiscal year.
Among the total six industrial sectors with negative growth, the construction sector has the highest negative growth rate of 7.2 per cent.
According to the NSO, the growth of this sector remained negative due to the fact that construction work could not accelerate in the second quarter compared to the first quarter.
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