KATHMANDU: Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari on Sunday said that Nepal is facing a serious challenge to keep itself untouched from global economic slowdown.
Speaking at the annual general meeting of the Confederation of Banks and Financial Institutions Nepal, Adhikari said the major challenges for the country at present are to maintain external sector stability and price stability.
“The main achievement of this year will be to make the country untouched by the slowdown of the construction sector and the global recession,” he said.
According to Adhikari, some symptoms of the global impacts have been traced also in Nepal. “The authorities concerned should act on time to maintain the external sector’s balance.”
In the aftermath of the COVID-19 pandemic followed by the Russia-Ukraine war, the majority of countries in the world have been facing a serious economic crisis, including excessive price hikes. The records with a number of international organizations show that the growth rate of the global economy fell to 3.2 percent in 2022 from six percent in 2021. It is projected to fall further to 2.7 percent in 2023.
A survey carried out by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) also shows that a number of private sector industries of the country are severely hit by the global economic crisis. As a result, manufacturing industries, mainly those producing construction materials including iron rods and cement, have been operating at only 30 percent of their total capacity.
While the consumption of everyday essentials has fallen by 18 percent, the transaction of electrical appliances has been down by 55 percent, that of automobiles by 75 percent, restaurant business by 20 percent and real estate business by 48 percent.
The total credit flow of banks was only Rs 60 billion during April and November of 2022, a massive fall compared to Rs 450 billion during the first six months of the fiscal year 2021/22. If the government fails to implement the necessary corrective measures on time, the economy will fall into serious problems, the private sector has warned.