Kathmandu, September 17:

Lowering its previous forecast, Asian Development Bank (ADB) has pegg-ed Nepal’s GDP growth at 2.5 per cent for the second half of fiscal year 2007.

Nepal’s GDP growth is lowest among the South Asian countries and expected to grow by 2.8 per cent in 2008, according to the Asian Development Outlook (ADO) update released today. Earlier, the bank had forecasted that GDP would grow by 2.8 per cent in fiscal 2007.

The peace process has rekindled hopes of economic revival. Whether the 2.1 per cent average growth of the past five years can be substantially lifted to bring the country nearer to its real potential depends crucially on sustaining peace, including timely and non-violent constituent assembly elections, states the Manila-based multilateral development lending agency’s report.

The report points out that over the medium term, the economic outlook will depend on how fast the new government can both step up the pace of structural and governance reforms and maintain macroeconomic stability. It will concurrently need to boost investment in infrastructure and basic services, education, and health.

The report further states that agriculture production is likely to grow by the same amount as like GDP, but this will depend on the weather, since irrigation is patchy. Weather conditions in the early months of 2007 have not been the best but expansion penciled in for the year still seems achievable.

Nevertheless, the challenges are h-uge and include widespread poverty.

China, India grow:

MANILA: Growth in developing Asian economies should rise more than eight per cent this year and next, buoyed by strong performances from China and India, the ADB said. In a regional update, it forecast a modest slowing of growth and warned of higher risk factors next year, arising notably from a tightening in credit markets. “Momentum in China and India supports fast growth at the regional level,” the Philippines-based lender said, raising the region’s GDP forecast for this year to 8.3 per cent from 7.6 per cent.— AFP