By Our Reporter
The Asian Development Bank (ADB) has forecasted 5.5 per cent of Gross Domestic Product (GDP) growth in Nepal for the coming fiscal year 2018/19.
But the bank has predicted a growth of only 4.9 per cent in the current fiscal year.
The ADB higher forecast for next fiscal year hinges on the assumption of normal monsoon and acceleration of ongoing mega projects. It may be noted that the Upper Tamakoshi Hydropower Project of 456 megawatt will likely be added to the national grid by coming fiscal year, ending the country’s reliance on power import at least during the rainy season.
The Edition of Macroeconomic Update of Asia, the main annual publication of ADB, released here last week, expected Nepal’s economy to grow at a slower pace of 4.9 per cent in current fiscal year from 6.0 per cent in previous fiscal year weighed down by floods of August 2017 and the erosion of base effect.
Even with increased capacity utilization of industries, industrial growth is set to be lower in current fiscal year from the high rate in previous fiscal year, largely due to low investment in the manufacturing sub-sector for years owing to political instability and structural bottlenecks, reads Macroeconomic Update.
Similarly, average annual inflation is expected to rise moderately to 5.5 per cent in current fiscal year 2017/18 from 4.5 per cent in previous fiscal year. This is below the inflation target of 7.0% set by Nepal Rastra Bank and external sector stability is vulnerable over the medium-term with slow remittance growth and rising trade deficit, he added.