The Asian Development Bank (ADB) has projected Nepal’s economic growth to grow by 4.1 percent in the current fiscal year 2021/2022.
Earlier, the ADB had projected in April Nepal’s economic growth rate of 3.1 percent for 2020/2021 and 5.1 percent for 2021/2022. However, estimates from the same month show that the rate will be reduced to 2.3 percent in 2020/2021 and 4.1 percent in 2021/2022.
“The ongoing corona vaccination campaign is the main reason for the increase in growth,” said Arnaud Cauchois, ADB’s Country Director for Nepal. However, the ADB has also considered the risk of an increase in the COVID-19 cases.
According to the report, the growth rate of Nepal’s agricultural sector may increase due to the monsoon. Similarly, with the increase in exports and strong domestic demand, the results of the industrial sector will be very good.
The ADB estimates that the vaccine campaign will gradually reduce the rate of corona infection.
The government has given priority to the national health care system in its economic policy and will be supported by a favorable monetary policy, the ADB said. Rising economic activity in transportation, wholesale and retail is also expected to boost the services sector, the ADB said.
With the opening of trekking routes and travel, international tourist arrivals are expected to increase, declining by 80.8 percent in 2020. However, it has been mentioned that it will take time for the tourism sector to return to its pre-epidemic state.
The report also mentions that Nepal’s inflation will increase by 5.2 percent in 2022. In 2021, the rate was estimated at 3.6 percent. This is due to rising global crude oil prices and improving domestic demand.
As investment grows and the economy returns to normal, non-oil sectors are also on the rise, the report said.
However, the growth rate of oil imports is expected to slow down gradually.
