World Bank Projected Nepal's Economic Growth 2.1 Percent in Current FY:
The World Bank has stated that the lockdown issued by Nepal for the prevention of COVID-19 infection has had a huge impact on the overall economy. Releasing the 'Nepal Development Update' on Thursday, the World Bank stated that Nepal's economic growth rate reached only 1.8 percent in the last fiscal year 076/77. The bank has also projected an economic growth rate of 2.1 percent for the current fiscal year. The World Bank concludes that the lockdown has affected growth in the last fiscal year, with growth steadily above 6.5 percent over the past three years.
According to the update made public by Finance Minister Dr. Yubaraj Khatiwada at a program organized through a webinar, inflation has reached 6.4 percent in the last four years. Similarly, the World Bank has projected the growth rate of the agriculture sector to reach 2.6 percent last fiscal year. The growth rate of the service sector will be one percent, according to the update.
Similarly, the growth rate of the industrial sector will be less than four years and only 3.2 percent, according to the World Bank. Commodity imports fell 2.8 percent for the first time in three years. Exports, on the other hand, increased by 22.1 percent. The World Bank has stated that the deposits in the bank have increased but the loans have decreased due to lack of economic activities due to the lockdown.
It has been mentioned that the budget has come under pressure due to the decrease in foreign exchange earnings and revenue due to COVID-19. The bank has projected that poverty and unemployment could rise due to the transition. According to the update, the changed economic behavior due to the epidemic may affect the growth rate in the future as well. The World Bank has also suggested that social assistance is needed to protect the livelihoods of the poor in the event of an epidemic. However, the government has tried to address the dilemma through the budget and monetary policy, the World Bank said.
During the webinar, Finance Minister Dr. Yubaraj Khatiwada said that Nepal has been suffering more socially and economically lately due to disasters like locusts and floods along with Kovid. He said that the blockade has affected trade, investment, and employment, adding to the challenges. However, he said that despite the difficult situation, it has managed to maintain a kind of stability in the economic and financial sectors.
In particular, the current account deficit is lower than previously estimated at 8 percent and inflation is projected to remain at 6 percent, he said. He also clarified that the budget has been kept in the balance due to the reduction in expenditure and reduction in imports.
He informed that the government has brought programs such as health, economic rehabilitation, relief, and assistance to the private sector through the budget of the current fiscal year for the economy affected by COVID-19. Faris Hadad Jervos, who has been the country director for Nepal, Maldives, and Sri Lanka, said public policy and planning were needed to address the challenges of job cuts and rising poverty rates as the global economy is in crisis due to COVID-19.
