KATHMANDU, April 13: Painting a grim economic picture, the World Bank has significantly lowered Nepal's growth projection to a range between 1.5 percent and 2.8 percent in the current fiscal year 2019/20. This is the downward revision of the growth forecast from 6.4 percent that the World Bank had made in October last year.
Releasing its regional update on Sunday, the World Bank warned that the COVID-19 will hit all South Asian countries including Nepal, triggering a recession in some that could linger in 2021.
The grim outlook of Nepal comes from the Washington-based international development agency at a time when the government still scrambles to assess the economic fallout of the COVID-19.
The pandemic is significantly slowing Nepal's high growth momentum of above 6 percent per year that it observed after the fiscal year 2016/17 compared to 4.5 percent of average annual growth for a decade before that.
Earlier last week, the Asian Development Bank projected Nepal's growth to remain at 5.3 percent.
Both forecasts are far lower than the government's target to achieve 8.5 percent growth rate in the current fiscal year 2019/20. However, the government is yet to come up with any revision to the growth target.
“Growth is expected to decelerate to 2.8 percent in FY2020 reflecting headwinds to agricultural growth, a significant reduction in remittances and tourism, and broader disruptions from the pandemic,” read the report, warning that the risk of falling into poverty is high, and it will increase in 2020.
The upcoming fiscal year's outlook for Nepal is also bleak, according to the World Bank's report.
“Economic growth during FY21 [2020/21] is also likely to remain subdued due to the lingering effects of the pandemic and slow growth in India,” read the report, adding that some recovery is expected in next fiscal year 2021/2022.