KATHMANDU, August 22: The recent incessant monsoon rains, which triggered massive floods in tarai and landslides in other parts of the country, have added an element of uncertainty to the growth outlook for Fiscal Year 2017/18, according to Nepal Rastra Bank (NRB).
Releasing annual macroeconomic and financial situation report for the last fiscal year -- 2016/17 -- in Kathmandu on Monday, the central bank has warned that the havoc created by the natural disaster mostly in the southern plains may weigh on the economic growth of the country.
Buoyed by estimated economic growth of 6.9 percent in the last Fiscal Year 2016/17, the government has set the growth target of 7.2 percent for the current Fiscal Year 2017/18.
“The havoc wreaked by torrential downpour across the southern plains in terms of loss of lives, both of human and cattle, destruction of infrastructure and inundation of fertile land with sands, has the danger to impair potential output,” read the report of the central bank.
“However, it is too early to prejudge the likely impact of the recent floods and inundation on summer crops, especially, paddy production,” added the report.
However, the central bank has said that there are also other factors that could determine the pace of growth.
“The behavior of rains during the remaining period of monsoon, the pace of implementation of national pride projects, and the reconstruction of national heritage destroyed by the earthquakes of 2015 will underpin the growth prospect,” stated the report.
Earlier in the last fiscal year, the economic output of the country grew by 6.94 percent compared to the 6 percent growth target of the government.
According to the NRB, good monsoon rains, improved power supply, and normal supply situation helped accelerate growth from the low base of the preceding year.
In the previous Fiscal Year 2015/16, the country had observed GDP growth of 0.01 percent following the devastating earthquakes of April 2015.