World Bank projects Nepal's economic growth to be 3.3 percent in FY24

The World Bank has provided insights into Nepal's economic trajectory, forecasting a growth of 3.3% in FY24. This growth is attributed to the resurgence of tourism and an uptick in hydropower exports. Private consumption is expected to be the main driver, supported by a significant rise in remittance inflows, according to the World Bank's latest country development update.

Despite the positive outlook, the update highlights persistent challenges. Private investment remains subdued, underscoring the need for further reforms to attract more investment. The World Bank projects a further growth rebound to 4.6% in FY25 but cautions that this forecast is contingent on various factors, including potential slowdowns in partner countries like India, Gulf nations, and Malaysia, which could impact remittances and tourism.

“Strengthening the implementation of capital expenditure, boosting business confidence, and strengthening Nepal's international competitiveness is key to stimulating economic growth and reducing poverty,” said Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka.

The South Asia Development Update recommends policy interventions to promote firm growth and employment, including enhancing trade openness, improving business environments, removing financial sector constraints, enhancing education, and strengthening women's rights protection. These measures are deemed crucial for fostering employment growth, enhancing productivity, and facilitating public investments in climate adaptation.