Nepal’s economy is expected to grow by 4.5 percent in FY25, up from 3.9 percent in FY24, despite significant natural disasters in late 2024. According to the World Bank’s latest Nepal Development Update: Leveraging Resilience and Implementing Reforms for Boosting Economic Growth, this growth will be driven by increased domestic trade, hydropower generation, and paddy production.
The report also projects that Nepal’s economy will expand at an average annual rate of 5.4 percent in FY26 and FY27, with the services sector playing a key role in driving this growth.
David Sislen, World Bank Country Division Director for Maldives, Nepal, and Sri Lanka, emphasized the importance of private sector-led growth to generate employment. He noted that Nepal can build on its strong history of resilience by implementing key structural reforms.
However, the report also outlines risks to the economic outlook, including geopolitical and trade uncertainties, potential deterioration of asset quality in the financial sector, policy inconsistencies due to frequent bureaucratic changes, and delays in capital expenditure execution.
Professor Dr. Shiva Raj Adhikari, Vice Chairman of the National Planning Commission, highlighted the importance of effective budget execution and timely project completion to meet Nepal’s economic targets under the 16th Plan.
The Nepal Development Update, published twice a year, provides a comprehensive analysis of Nepal’s recent economic performance and its long-term trajectory within the global economic landscape.
