ADB projects Nepal’s economy to grow by 3.6% in 2024

Kathmandu: In its latest Asian Development Outlook (ADO) for April 2024, the Asian Development Bank (ADB) has projected a growth rate of 3.6% for Nepal’s economy at market prices in the year 2024. This marks a significant increase from the estimated growth of 1.9% in fiscal year 2023.

ADB Country Director for Nepal, Arnaud Cauchois, highlighted that a gradual relaxation of monetary policy, coupled with improved consumer and investor confidence, is expected to drive economic activity in 2024. He also emphasized the anticipated acceleration in the growth of the industry sector, fueled by increased government capital spending and additional hydroelectric power generation.

Additionally, the service sector is forecasted to experience growth, supported by eased credit controls, decreasing interest rates, and expanding tourism revenues. However, agricultural growth may see a marginal increase due to a record rice harvest offset by shortfalls in winter crops, influenced by deficient rainfall during the winter season.

The ADO report also predicts a decrease in annual average inflation to 6.5% in fiscal year 2024 from 7.7% in fiscal year 2023, attributed to subdued oil prices and lower inflation in India, Nepal’s primary import source.

While external risks are considered relatively contained, the report notes the possibility of downside risks stemming from a global economic downturn impacting Nepal’s tourism and remittance earnings. Geopolitical tensions could also disrupt supply chains, leading to increased global inflation and tighter financial conditions, potentially affecting domestic investment and consumption.

ADB Principal Economist for Nepal, Jan Hansen, underscored the commitment to support Nepal in achieving prosperity and inclusivity. Established in 1966, ADB remains dedicated to fostering prosperity, inclusivity, resilience, and sustainability across Asia and the Pacific, with a focus on eradicating extreme poverty.