ADB forecasts 6.2 per cent economic growth for Nepal

KATHMANDU: The Asian Development Bank (ADB) has projected that Nepal's economic growth will be between 5.2 to 6.2 per cent in 2017.

The ADB shared this information organising a news conference here today. It is estimated that the GDP increase in terms of basic price in the Fiscal Year 2017/18 will be that much.

The ADB also forecasts that the inflation will remain between 6.0 to 6.5 per cent, less than the government target.

Although the service sector has shrunken due to the decrease in remittances, an encouraging economic outlook than had been predicted earlier has been ensured due to the maximum growth in agricultural production, the prospects resulting from momentum the post-earthquake reconstruction picked up in the last two quarters of the Fiscal Year 2017/18 and the improvement in the investment climate, the ADB stated.

ADB Country Director Kenichi Yokoyama said the industrial production is expected to increase due to the notable improvement in power supply and the production activities taking up speed again.

He said the activities in the service sector might shrink than the possible level due to the marginal impact of the reduced inflow of remittance and the demonetisation of large denomination currency notes in India.

Chief economic analyst at the ADB, Sharad Bhandari said the capital expenditure performance was not encouraging even up to the six months into the current fiscal year and the trend of monthly expenditure resembled that of the previous years. He added that the government was weak in budget implementation aspect.

The ADB has suggested starting further reforms in the actual practices and procedures of mobilizing foreign investment, in the approval, visa granting and repatriation of the profit of such investment, removing the duplications in the institutional terms of reference and adoption of automated system for foreign investment.

It also suggested that more initiatives were needed to protect intellectual property rights and serious efforts, including legal measures, had to be put in for creating a climate of healthy industrial relations.

Meanwhile, ADB Country Director Yokoyama is leaving for India upon completion of his five-year term here. He has been transferred as the ADB's Country Director for India.