Kathmandu, December 12
The World Bank (WB) today forecast Nepal’s economy will grow at 6.4 per cent in fiscal year 2019-20, sharply lower than the 8.5 per cent economic growth target set for the year by the government.
Driven by investments in tourism sector, particularly the Visit Nepal 2020 programme, including efforts to increase air connectivity, the WB has also projected an average annual growth rate of 6.5 per cent in the medium term.
Releasing its Nepal Development Update today, the bank said industrial growth is likely to be supported by construction activities, investments in cement and hydropower sectors, and improved capacity utilisation in the manufacturing sector, thereby making growths stronger.
The report notes that import growth will slow down as the government implements its programme to keep the fiscal deficit in check, which in return will help contain the trade deficit.
Similarly, inflation is expected to pick up slightly but will remain below five per cent during the forecast period assuming stable agricultural production, regular supply of electricity, and low inflation in India, as per the report.
“Increased exports will be critical to sustained growth over the medium-term. It will be important for the government to continue with reforms to attract foreign investment,” said Kene Ezemenari, senior economist of World Bank. “To effectively support Nepal’s growth aspirations, future reforms will need to be grounded in strong analysis and data,” she added.
Meanwhile, the update has highlighted the importance of data for development, particularly in the context of the country’s historic transition to federalism. Citing that the federalism has created a surge in demand for more and better data, the World Bank has stressed on enhanced data availability to strengthen planning and budgeting at the subnational levels, including the preparation of medium-term expenditure frameworks.
“A robust federal framework, therefore, rests on more and better data that will support evidence-based policies,” reads the report.
Meanwhile, Finance Minister Yubaraj Khatiwada said the need for Nepal is data that is disaggregated, more frequent, reliable and accessible. “Nepal’s federal structure has added another dimension for data at provincial level, which is a challenge but very important for development programmes to leave no one behind. The Statistics Act, which is to be approved soon, is expected to further empower Central Bureau of Statistics and provide added responsibility to subnational governments on data for national policymaking.”
However, Khatiwada mentioned that government will stick to its stand of achieving 8.5 per cent economic growth this year and it would be too early to revise the projection.
In addition, the Nepal Development Update articulates a vision for a future data ecosystem and the need for short-term reforms to make the most of existing data and longterm reforms that establish an enabling environment that fosters data sharing, integration and use.
“Data is central to the success of federalism. Nepal needs a vision and strategy for a future data ecosystem that is aligned to the new federal structure and promotes engagement of civil society and the private sector,” said Faris Hadad-Zervos, World Bank’s country manager for Nepal.
Written by Nishant Pokhrel
This news first appeared on https://thehimalayantimes.com/business/wb-projects-6-4pc-economic-growth-this-fiscal/ under the title “WB projects 6.4pc economic growth this fiscal”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.