World Bank projects Nepal’s growth rate to be 2.7 percent in current FY

Published On: April 1, 2021 06:30 AM NPT By: Republica | @RepublicaNepal

KATHMANDU, April 1: The World Bank (WB) has projected that Nepal will grow by 2.7 percent in the current fiscal year, which shows an improved recovery due to the government’s initiatives to check the spread of COVID-19 and going into prompt action to offer flexible monetary policies and fiscal stimuli.

The forecast by the international lending institution in its report titled ‘South Asia Economic Focus: South Asia Vaccinates’ released on Wednesday, is way far below the government’s estimation of achieving an economic growth rate of around seven percent in 2020/21. Due to the effect of the pandemic, Nepal’s gross domestic product (GDP) witnessed a negative growth rate of 1.99 percent in the last fiscal year, according to the Central Bureau of Statistics.

The WB has projected that Nepal will achieve a GDP growth rate of 3.9 percent in the next fiscal year and a growth of 5.1 percent in 2022/23. It has attributed the recovery to an increased inflow of remittance.

The WB has also shown the prospects of an economic rebound in South Asia, taking the region to grow by 7.2 percent in 2021 and 4.4 percent in 2022, climbing from historic lows in 2020 and putting the region on a path to recovery. “However, the growth is uneven and economic activities are well below pre-COVID-19 estimates, as many businesses need to make up for lost revenue and millions of workers, most of whom are from the informal sector, still reel from job losses. These workers have been facing falling incomes, worsening inequalities, and human capital deficits,” according to the WB’s press statement.

The WB says that the improved economic outlook reflects the South Asian countries’ efforts to keep their COVID-19 caseload under control and swiftly roll out vaccine campaigns. Governments’ decisions to transition from widespread lockdowns to more targeted interventions, accommodating monetary policies and fiscal stimuli — through targeted cash transfers and employment compensation programs — have also propped up the recovery, the twice-a-year-regional update reports.