KATHMANDU, Sept 22: Owing to prevailing high infection rates of the coronavirus, the Asian Development Bank (ADB) has revised Nepal’s economic growth rate to 4.1 percent from an earlier projection of 5.1 percent in 2022.
In fiscal year 2019/20, Nepal witnessed a negative economic growth of 2.1 percent, which was a record low figure in nearly the past four decades. The economy tends to revive next year on the back of the implementation of an expansionary fiscal policy with more focus on the strengthening of health care, employment generation, expansion of social protection for the poor and vulnerable, and promotion of agricultural productivity, reads the Asian Development Outlook-2021 unveiled on Wednesday.
The ADB has also revised the projected economic growth rate of Nepal to 2.3 percent in 2021, down from its previous estimation of 3.1 percent announced last April.
The international lending institution has come up with revised projections based on a massive plunge in the service sector, tourism in particular. According to the ADB, tourists’ inflow in Nepal plunged by 80.8 percent after the COVID-19 pandemic hit the country. Tourism contributes around eight percent of the country’s gross domestic product (GDP). Due to the heavy downfall in tourism businesses, the overall service sector contracted by four percent, reads the ADB’s report.
Despite the plunge in the tourism businesses, the ADB estimated the aforementioned economic growth rate on the back of expanding agriculture and industrial sector along with a notable rise in aggregate demand due to increased consumer spending amid strong growth in remittances. The country’s agriculture businesses rose slightly from 2.4 percent and that of industry grew by 1.7 percent as of mid-July.