With the gradual resumption of economic activities, the World Bank has estimated that Nepal's gross domestic product will grow by 2.7 per cent in the current fiscal year.

Unveiling its twice-a-year regional update titled 'South Asia Economic Focus' today, the World Bank has sharply revised up the country's GDP growth projection from its earlier projection of 0.6 per cent in October. The revision is 'supported by better than expected remittance inflows', as per the report.

The report has stated that Nepal is gaining growth momentum since 2020-end, creating a fuller picture of the extent and breadth of the recovery.

The World Bank has stated that the growth of remittances recorded in official data was flat in Nepal in 2020. After falling in second quarter of 2020, remittances mostly recovered, and grew by 6.7 per cent in the latter half of 2020 (first part of the fiscal year 2020-21) compared to the previous year. An estimate of unrecorded remittances, based on unaccounted for flows in the errors and omissions of the balance of payments, suggests that they may have grown more in 2020.

The September 2019 policy changes made it easier for migrants to open bank accounts, which may have facilitated a shift from unrecorded to recorded remittances, the World Bank has said. Similarly, the report has mentioned that Nepal's GDP is projected to grow by 5.1 per cent by 2023.

In terms of the region, the report has stated that South Asia is firming up as growth is set to increase by 7.2 per cent in 2021 and 4.4 per cent in 2022, climbing from historic lows in 2020 and putting the region on a path to recovery.

"We are encouraged to see clear signs of an economic rebound in South Asia, but the pandemic is not yet under control and the recovery remains fragile, calling for vigilance," Hartwig Schafer, World Bank vice-president for the South Asia Region, has been quoted as saying in a media release accompanying the report.

"Going forward, South Asian countries need to ramp up their vaccination programmes and invest their scarce resources wisely to set a foundation for a more inclusive and resilient future."

Amid this, the report has stated that India, which comprises the bulk of the region's economy, is expected to grow more than 10 per cent in the fiscal year 2021-22 - a substantial upward revision of 4.7 percentage points from January 2021 forecasts.

Similarly, the outlook for Bangladesh and Pakistan has also been revised upward, supported by better than expected remittance inflows.

Bangladesh's GDP is expected to increase by 3.6 per cent in 2021; while Pakistan's growth is expected to reach 1.3 per cent in 2021.

"The improved economic outlook reflects South Asian countries' efforts to keep their COVID-19 caseload under control and swiftly roll out vaccine campaigns. Governments' decisions to transition from widespread lockdowns to more targeted interventions, accommodating monetary policies and fiscal stimuli - through targeted cash transfers and employment compensation programmes - have also propped up recovery," the report reads.

"The health and economic benefits from vaccinations greatly exceed the costs involved in purchasing and distributing vaccines for all South Asian countries," said Hans Timmer, World Bank chief economist for the South Asia Region.

He further added that the South Asia has stepped up to vaccinate its people, but its healthcare capacity is limited as the region only spends two per cent of its GDP on healthcare, lagging any other region.

A version of this article appears in the print on April 01, 2021, of The Himalayan Times.