The World Bank's latest Nepal Development Update has highlighted the importance of improving export competitiveness for a resilient economic recovery.

"Nepal's untapped export potential is estimated to be around $9.2 billion, 12 times its actual annual merchandise exports," said Kene Ezemenari, World Bank senior economist and lead author of the update. "This export potential represents an opportunity to create an estimated 220,000 new jobs, with significant implications for productivity growth. Realising that potential is not unrealistic in the medium term."

The report outlines six key priorities for Nepal to achieve its export potential. These include reforming the tourism sector for a quick and resilient recovery; simplifying and streamlining processes to attract more FDI; modernising export promotion and upgrading exporters' capabilities; reducing trade costs; investing in phytosanitary and quality control-related infrastructure; and boosting digital trade and e-commerce for more opportunities linked to global value chains.

"Nepal's economy is on the path to recovery amid the severe impacts of the global COVID-19 pandemic which affected people lives and livelihoods, and businesses," stated Finance Minister Bishnu Prasad Paudel during the virtual launch of the update today.

"The recommendations that can help harness the potential of exports in supporting Nepal's economic recovery are in line with government's policies and priorities. The government is working together with development partners and private sector on a green, resilient and inclusive development agenda to help Nepal build back better and greener from the pandemic."

The government's relief, restructuring and resilience plan addresses the pandemic's impacts from the immediate to the long term with a focus on a green, resilient, inclusive recovery.

The first stage of the plan is focused on relief support to businesses and households most affected by COVID-19.

In the restructuring phase or medium-term, focus is on recovery through investments to promote and create green jobs that sustain the country's natural capital base. In the long term, the plan focuses on sustainability and resilience for inclusive growth.

"We welcome the government's planned reforms to support Nepal's green, resilient, and inclusive development. This will be the foundation for Nepal to emerge stronger from the crisis," stated Faris Hadad-Zervos, World Bank country director for Nepal, Maldives and Sri Lanka.

"We look forward to continued collaboration with government and development partners in this effort, particularly on investments that harness Nepal's export potential to support a sustainable and resilient recovery."

After contracting for the first time in 40 years in fiscal year 2019-20, Nepal's economy is projected to grow by 2.7 per cent in the current fiscal, driven primarily by services as social distancing measures continue to be relaxed and vaccines rolled out for priority populations. Agriculture is also expected to perform well, on back of recent favourable monsoons. Exports could be a powerful platform to boost post-pandemic recovery and enable Nepal to transition towards green, resilient, and inclusive development, states the update.

The update notes that the tourism sector may not fully recover without reforms to readjust to a post-COVID-19 tourism market. The current account deficit is expected to widen marginally in this fiscal to 1.2 per cent of GDP as imports and remittances recover modestly while exports remain tepid. Revenue performance is also expected to remain weak.

A version of this article appears in the print on April 13, 2021, of The Himalayan Times.