Nepal’s economy to grow by 4.5 percent «

Nepal’s economy to grow by 4.5 percent

The World Bank (WB) has forecast Nepal’s economy to grow at 4.5 percent – half the government projection — in the next fiscal year.
Nepal’s economy will grow at the rate of 4.5 percent in the fiscal year 2018-19, and will slow down to 4.2 percent in 2019-20 and 2020-21, the World Bank’s ‘Global Economic Prospects June 2018,’ published on Tuesday read.
However the government in the fiscal policy for the next fiscal year 2018-19 has projected the economy to grow at 8 percent and it has been under tremendous pressure to push the economic growth to the double digit to not only meet the middle income status by 2030 but also to graduate to the developing countries league by 2022.
The World Bank’s ‘Global Economic Prospects June 2018’ – in its special section The Turning of the Tide? – has also claimed that the economic activity in South Asia has improved markedly since mid-2017 and continued to gain strength in early 2018, reflecting improved consumer and investor sentiment and stronger investment. Inflation has been increasing and is above target in India, it reads, “In many countries, budget deficits have widened this year, reflecting weaker-than-expected revenues and expansionary policies, such as in Bangladesh or Nepal.”
Growth in the region is projected to strengthen to 6.9 percent in 2018 and to 7.1 percent in 2019, mainly as factors holding back growth in India fade. Domestic demand is a key driver of growth in the region, and a pickup in exports should add additional support to economic growth. Per capita growth rates in the region are advancing at rates expected to help bring down poverty in coming years, especially in India.
The report has also mentioned that even though the region is less open to trade than elsewhere, the outlook could be adversely affected by external shocks such as an abrupt tightening of global financial conditions or an escalation of trade protection. “A higher-than-expected rise in oil prices could amplify macroeconomic vulnerabilities and weigh on economic activity in a region that is a net importer of oil,” it adds. “Further deterioration of fiscal balances, a continued build-up of debt or a widening of current account deficits would leave countries of the region exposed in the event of tightening of domestic or external financing conditions. Reform setbacks could hold back the investment recovery that is underway and slow credit growth in the region.”
An increase in policy uncertainty or deterioration of the security environment could dampen confidence and slow growth. The region has experienced an increased incidence of natural disasters in recent years, many of them associated with climate change, and further occurrences could disrupt economic activity, the regional report sums up.