Asian Development Outlook launched with projection of economic growth; Nepal to have 3 % growth this year

DBKathmandu / March 30: The Asian Development Bank (ADB) today released the Asian Development Outlook 2016, in which Nepal’s economic growth in the coming Fiscal Year is projected to reach 4.8 per cent.

The ADB in the Outlook states that the economic growth slowed down and was limited to three per cent due to the occurrence of the devastating earthquake towards the beginning of the end of the last Fiscal Year and the economic growth is expected to reach 4.8 due to the reconstruction that will take place in the coming Fiscal year and the improvement in trade and transit.

GDP has decreased due to the obstruction in the wholesale and retail trade, transport, tourism and economic services owing to the difficulties for some months in the supply of essential materials for infrastructure construction and the earthquake; the agriculture growth has contracted due to the unfavourable weather and the growth in the industrial sector too was not as expected due to the energy crisis, the ADB concluded in the Outlook.

ADB Country Director for Nepal, Kenichi Yokoyama stressing on reconstruction and increasing capital expenditure, said that Nepal should be able to benefit from countries with big economies like China and India. He was of the view that Nepal’s economic growth could pick up by increasing investment in human resources and physical infrastructure.

Yokoyama argued that economic growth could be increased provided that works on hydropower projects and reconstruction are accelerated and also suggested doing away with the procedural complications related to purchase. He also predicted an increase in the average inflation in the current Fiscal Year, putting it at around 8.2.

The Outlook states that growth in the South Asia subregion accelerated to 7.0% in 2015 and will accelerate further to 7.3% in 2017 after a hesitation at 6.9% this year.

The subregion’s prospects reflect heavy weighting for India, where growth is expected to dip marginally to 7.4% in 2016 as exports decline and both public and private investment slows, and then pick up to 7.8% in 2017 as investment revives.

Apart from weakness in export demand, other economies in the subregion face unique challenges to growth: a devastating earthquake and a political standoff in Nepal, a drop in high-end tourism in the Maldives, and much-needed fiscal reform to deal with a buildup of excessive debt in Sri Lanka. Both Bangladesh and Pakistan see continued moderate growth benefitting from sustained progress toward macroeconomic and structural reform. Subregional inflation fell to 5.0% in 2015, benefitting from low oil and commodity prices, but is projected to revive to 5.2% in 2016 and 5.7% in 2017. RSS