Nepal’s GDP growth rate projected at 3.5 per cent

Himalayan News Service

Kathmandu, April 16:

Nepal’s Gross Domestic Product (GDP) is expected to grow by 3.5 per cent during the fiscal year 2004, as economy recovered and grew by 2.4 per cent in 2003, following a marginal contraction during the previous year. According to a report of the United Nation Economic and Social Commission for Asia and the Pacific (UNESCAP) on the economic and social survey 2004 launched by the United Nations Information Centre (UNIC) and Centre for Policy Research and Analysis (CPRA) unveiled here today, Nepal’s GDP growth is expected to touch 4.5 per cent in 2005 given progress in the peace talks, higher productivity in agriculture, rebound in exports and manufacturing production, and a revival in tourism. The UNESCAP report further states that construction, gas, electricity and water will all benefit from higher donor assistance and infrastructure spending. Dr Nirmal Pandey, former member of the National Planning Commission (NPC) and director of CPRA said that the UNESCAP report has mentioned economic dimensions and challenges for the Asia and Pacific, including Nepal. Nepal’s own economic analysis is also included in the report in detail. Presenting the summary of the report, Murari Prasad Upadhyaya, senior journalist said that the report has related growth with poverty reduction in South, East Asia and West Asia. He said that developing ESCAP economies growth picked up in 2003 by almost half a percentage point. Upadhyaya said that the survey looks at trends in the regional economy in 2003, prospects for 2004 and policy choices facing the region. The report also considers longer term issues relating to poverty reduction strategies in the region in the light of the multidimensional nature of poverty, said Upadhyaya. Highlighting Nepal’s economic performance, he said that GDP growth is projected to accelerate to 3.5 per cent in 2004 which is less than the estimation made by the Nepal government. UNESCAP’s figures and statistics were collected at the close of March 2003 and the report was prepared later on, according to CPRA officials.

Upadhyaya said that the rate of consumer price inflation in Nepal accelerated sharply in fiscal 2003 to reach five per cent as a result of increased wholesale prices, supply shortfalls particularly in agricultural items, and administrative price increases for education and petroleum products.

According to the report, inflation is expected to come down slight in the fiscal year 2004 in Nepal along with diminished follow-on effects from earlier price increases and lower international and domestic fuel prices. Upadhyaya said that inward remittances from migrant workers exceeded the amount of external aid in 2003, as the latter fell short of budgetary targets. Gross international reserves are estimated at $1 billion, he said and also added that Nepal’s external debt, mostly concessional, is in excess of 48 per cent of GDP. The report suggests addressing poverty through durable economic growth and equitable access to government services. Meanwhile, there is a need to implement structural reforms in the financial and public sectors and, more effective targeting of policies towards the poor.

Giving the vote of thanks, Ram Babu Shah of the National Information Office of UNIC, said the country is in a real difficult period, in which business sector’s role will be crucial.

Quoting Kofi Annan’s report, Shaha said, “During the time of conflict, the role of business enterprises is very much important to help reduce conflicts.” UNESCAP report was launched today by Upadhayay in Nepal, alongwith other Asian countries.