World Bank projects Nepal’s per capita income to fall further during 2021-23

KATHMANDU: The World Bank (WB) has projected that per capita income of Nepal will fall further during 2021-23.

In its report ‘The Global Economic Prospects’ published this month, the WB mentioned that the per capita income of Nepal in addition to Bhutan and Pakistan is facing the largest relative decline by almost 2 percentage points per year during 2021-23.

Despite rebound growth and an upgraded forecast, the number of people living on less than $ 1.90 per day is expected to remain above the pre-pandemic level. The report assumes tens of millions of new poor in the South Asian Region since 2020.

Also, the report suggests further exacerbation of inequality in South Asia with growing poverty rates combined with rising in informal employment, deteriorating labor markets and rising food insecurity.

The growth rate also reflected the impending fall in per capita income and rising inequality. The report indicated a sluggish real growth rate of Nepal amid a 7.6 per cent projection of South Asia in 2022.

The real GDP growth of Nepal at market price is expected to grow at 3.9 per cent in the fiscal year (FY) 2021/22. Nonetheless in 2022, Nepal is projected to become the 5th fastest growing economy in South Asia leaving behind Pakistan and Sri Lanka. Meanwhile, the growth figure of the Maldives (11 per cent), India (8.3 per cent), Bangladesh (6.4) and Bhutan (5.1) are up beating in comparison to Nepal.

The report is also an eye-opener for Nepal as it has already been inflicted from the widened trade deficit. It indicated that returning demand is expected to drive a strong rebound in imports and gradually widen the region’s current account deficit.