KATHMANDU, Oct 7: The World Bank (WB) has projected that the Nepali economy will grow by 3.9 percent in the current fiscal year, an improved average from 2020/21, with the country lifting containment measures as vaccination picks up and tourism and migrant worker flow recover.
Unveiling its latest South Asia economic focus titled ‘Shifting Gears: Digitization and Services-Led Development’ on Thursday, the multilateral lending institution attributed an improved economic growth largely to an expansion of the services sector.
In Nepal, the pandemic has accelerated the growth of digital services, with the use of electronic payment transactions increasing by double digits. The growth in the service sector as a whole is expected to drive Nepal’s recovery, despite structural constraints such as slow domestic job creation, the country’s high vulnerability to natural disasters and climate change, and large infrastructure gaps, the WB reports.
Faris Hadad-Zervos, World Bank Country Director for the Maldives, Nepal, and Sri Lanka, said the pandemic provides an opportunity for a number of South Asian countries to craft a recovery path that draws lessons from the crisis. He also praised the country for stepping up for green development.
“Nepal has recently adopted the Kathmandu Declaration as a joint commitment of the government and development partners towards the country’s Green, Resilient and Inclusive Development (GRID). Mobilizing the private sector through green investment and support for small and medium enterprises with job growth potential in the services sector is a key part of Nepal’s GRID strategy,” said the WB’s Country Director.
According to the WB, in South Asia, recovery continues as global demand rebounded and targeted containment measures helped minimize the economic impacts of the recent waves of COVID-19. But the recovery remains fragile and uneven, and most countries are far from pre-pandemic trend levels. In Nepal, recovery is vulnerable to risks, and will rely on the continued gradual resumption of economic activities alongside social distancing and an effective vaccination rollout this year.