In its latest Global Economic Prospects report, the World Bank has forecast Nepal's economy will grow 3.9 per cent in the current fiscal year 'supported by better agricultural output and rebounding services activity on improving vaccine coverage'. The forecast is unchanged from its projection last year.

The growth estimate for fiscal year 2020-21 and forecast for 2022-23, however, have been revised down. The international financial institution estimates Nepal's GDP growth was 1.8 per cent in 2020-21, 0.9 percentage points lower than its earlier projection. It has made a growth forecast of 4.7 per cent for fiscal year 2022-23 - 0.4 percentage points lower than the earlier projection.

For the South Asia region, the growth prospects have improved since June 2021, largely because of better prospects in Bangladesh, India, and Pakistan, according to the World Bank.

Regional growth is expected to accelerate to 7.6 per cent in 2022 as pandemic-related disruptions fade, before slowing to six per cent in 2023.

In most economies, monetary and fiscal policy are expected to remain broadly accommodative in 2022, but gradually shift to a focus on fiscal sustainability and anchoring inflation expectations.

Despite the upward revision to growth, output in 2023 is still projected to be almost eight per cent lower than projected before the pandemic.

Additionally, the pace of per capita income catch-up with advanced economies is expected to slow over the forecast horizon.

India's economy is expected to grow by 8.3 per cent in the fiscal year ending March 2022, unchanged from the June 2021 outlook. The forecast for fiscal year 2022-23 and fiscal 2023- 24 for India has been upgraded to 8.7 per cent and 6.8 per cent, respectively, reflecting higher investment from the private sector and in infrastructure, and dividends from ongoing reforms.

In the sub-region excluding India, growth momentum will pick up over the forecast horizon and is expected to expand by 4.4 per cent in fiscal year 2021-22.

Pakistan will benefit from structural reforms boosting export competitiveness and enhancing the financial viability of the power sector, as per the report.

A rebound in investment and external demand is expected to lead to a 5.1 per cent expansion in Bhutan in fiscal year 2021-22.

Bangladesh is expected to reach 6.4 per cent in fiscal year 2021-22 ending June 2022, and 6.9 per cent in fiscal 2022-23, due to increasing services activity and firming exports of readymade garments.

Nevertheless, the risks to the outlook remain to the downside, as per the World Bank.

The pandemic, and the emergence of the Omicron variant, could hinder economic activity by requiring additional mobility restrictions and undermining external demand.

Another risk stems from financing conditions. Further upward price pressures may cause inflation expectations to become unanchored, worsening domestic financing conditions, eroding real incomes, and weakening the financial sector.

Climate risks are becoming more prevalent in South Asia as cyclones, floods, and droughts have become more frequent and as the costs of such events have increased.

The region is one of the most vulnerable to climateinduced increases in poverty, disease, child mortality and food prices, the report states.

A version of this article appears in the print on January 13, 2022, of The Himalayan Times.