The report also predicted the inflation in Nepal to ease to 6 percent next year compared to 12.1 percent during the current fiscal year. Poor monsoon, slow growth of remittances along with creeping inflation are major challenges for Nepal´s economic outlook, Abdul Abad, senior economist in the IMF´s Research Department, said in a press conference organized to release the report. [break]
On the global economic issues, the report said the growth has been better than expected. IMF has predicted the global economic growth to touch 4.2 percent in 2010, an upward revision of 0.3 percent from its January forecast.
The report highlighted that the growth in emerging and developing economies will be much stronger with the initial forecast of 6.3 percent in 2010 and 6.4 percent in 2011. The most underlining development is that the growth appears not only strong but also sustainable as private sectors´ demand in the region is straightening, the report stated.
However, the World Economic Report stressed that large capital inflows on the back of higher interest rates and higher growth prospects are some of the major challenges that economies of developing countries are facing. Fundamentally such large inflows are good but we have also learnt from the past experiences that that can also lead for the booms and busts, the report warned.
How to best accommodate these flows, how much to let the currency appreciate, how to use macroeconomic policy and how to use macro-prudential tools to best avoid excesses and maintain stable growth are the main policy concerns for these countries, the report noted.
WB hails progress on MDGs
The World Development Report released on Tuesday reckoned that countries have made considerable progress towards achieving the Millennium Development Goals (MDGs), despite the worst global economic crisis in more than five decades.
In its optimistic tone, the World Bank report stated that the target to reduce the proportion of people living in extreme poverty by half is still within the reach in several developing countries, but warned that some of the low and middle income countries are unlikely to achieve that target.
Asia, home to most of the people living on less than $ 1.25 dollar a day, has accounted for much of this remarkable achievement, said the report and highlighted South Asia as the only region where trade has expanded despite the global recession.
However, the performance of South Asia along with Sub-Saharan Africa in educational attainment continued to be challenging, as 72 million primary school-age children are still out of formal education. The educational attainment MDG goal that aim to make all children be able to complete school by 2015 is close to be achieved, the report emphasized.
On gender equality, South Asia, Latin America and Caribbean countries have made impressive improvement by allowing women to occupy 20 percent seats of national parliament, said the report.
In a separate report on Global Financial Stability, the International Monetary Fund (IMF) has warned that the deteriorating fiscal balances and repaid accumulation of public debt can risk the recent recoveries from global recession.
The report has urged the member countries to look seriously into future regulatory reforms not only to address systemic risks but also to achieve a balance between safety of the financial system and its innovativeness and efficiency.
The regulatory reforms need to move forward expeditiously as they help to make financial system safer by improving quality of capital and liquidity management, the report stressed and urged member countries to beef up infrastructure underlining financial markets to make financial stability more resilient to unexpected shocks.
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