Nepal’s economy faced challenges in the current fiscal year, but both the World Bank and the Asian Development Bank foresee a rebound in economic growth in the coming years, with varying projections for fiscal year 2024 (FY24) and beyond.
The World Bank reported that Nepal’s GDP growth is expected to contract by 1.9 percent in the current FY23 in its ‘South Asia Development Update and Nepal Development Update, 2023’.
The World Bank anticipates a rebound in economic growth in the coming years.
They project GDP growth to increase to 3.9 percent in FY24 and further to 5 percent in FY25. This growth is expected to be supported by lifting import restrictions and gradually loosening monetary policy.
The World Bank highlighted several challenges, including low economic growth rate, growing current account deficit, and high inflation rates.
Inflation has been on the rise for the past three years, driven by supply-side shocks and domestic policy changes. The fiscal deficit is expected to be around 6.1 percent, and the annual average inflation to be around 7.5 this fiscal year due to the contraction of imports, impacting fiscal revenues.
According to the Asian Development Bank in its ‘Microeconomic Update’ report, Nepal’s economy is expected to grow by 1.9 percent in 2023 and is projected to improve to 4.3 percent in 2024
The ADB’s report suggests a more positive outlook for Nepal’s economic growth in the upcoming years compared to the current year.