Nepal to grow at 3pc: ADB

Himalayan News Service

Kathmandu, April 6:

Despite high oil prices and the devastating tsunami, developing countries in Asia are set to experience a robust growth in 2005, says an Asian Development Bank (ADB) report released today. The bank projects the region will achieve an overall economic expansion of 6.5 per cent to 6.9 per cent in 2005-2007 on the back of buoyant domestic demand and further strengthening of intra-regional trade, says the press statement issued by ADB today.

GDP growth rate for Nepal stands at three per cent for 2005, 3.7 per cent for 2006 and 4.3 per cent for 2007, according to the report. The growth rate for China and India stands high compared to Nepal.

The Asian Development Bank Outlook (ADO) published by the bank for 2005-2007 has stated that complex security situation and agriculture’s continued dependence on the weather have posed significant risks for economic expansion over the medium-term for Nepal.

Growth will likely ease in fiscal year 2005 mainly due to the anticipated weaker performance in agriculture, tourism, transport activities, and deterioration of the conflict in the second half of the year.

Beyond 2005, according to ADB outlook, it will hinge on credible progress toward a lasting resolution of the insurgency. The underlying assumption of the ADO 2005 projects are that: there will be no further deterioration of the insurgency in fiscal year 2005 and that progress will be made toward a lasting resolution in fiscal year 2006, stronger growth will be seen in both private and public sector investment in fiscal year 2006-2007.

Industry is projected to expand by 3.5 per cent in fiscal year 2006 and four per cent in 2007, while agriculture sector will average about 3.5 per cent, said ADO. The fiscal deficit is forecast to widen to three per cent in fiscal year 2006 and 3.5 per cent in 2007. Government expenditures are projected to grow strongly in both years on the assumption that an improvement in the security situation will allow the government to undertake major reconstruction work.

Growth rates for the same period for China stands at 8.5 per cent, 8.7 per cent and 8.9 per cent respectively. The forecasted growth rate for India is 6.9 per cent, 6.1 per cent and seven per cent in 2005, 2006 and 2007 respectively, says the survey.

The upbeat outlook draws on the strong growth momentum gained through spectacular economic performance in 2004, when the economies of developing Asia and Pacific registered gross domestic product (GDP) growth of 7.3 per cent in 2004, it is said.

“Developing Asia has seen its strongest economic growth since the financial crisis of 1997-98,” Ifzal Ali, ADB chief economist was quoted as saying in the press statement. “Nearly all of the economies in the region grew by more than five per cent in 2004. That is remarkable for an area that is home to about four billion people.”

The ADO, which includes analysis and forecasts of economic trends for 42 economies in Asia and the Pacific, noted that rapid growth in the region was underpinned by strong domestic and external demand. Developing Asian economies benefited from robust growth in major industrial countries and surging intra-regional trade driven by PRC’s dynamic economy, says ADO.