Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Asian Development Bank (ADB) has projected Nepal’s economic growth rate to reach 3.9% for the current fiscal year, driven primarily by expansion in the services sector. According to ADB, the recovery in tourism will significantly contribute to growth in related sectors, providing further momentum to the overall economy.
The ADB has also projected stable inflation trends, with Indian markets and the strength of the US dollar expected to play a crucial role in maintaining price stability. However, the bank predicts an average annual inflation rate of 5.4% for this fiscal year.
Despite expectations of a decline in interest rates, the ADB notes that private sector credit expansion may not meet expectations. The bank attributes this to the already high level of loans issued in previous periods, making significant growth unlikely in the near term. The ongoing downward trend in interest rates is expected to continue, thanks to the monetary policy framework becoming more flexible.
The ADB further predicts that although the pace of fiscal deficit expansion will slow, the lack of substantial improvement in revenue collection will keep the deficit growing. Additionally, the bank forecasts a current account deficit for the year, signaling persistent challenges in balancing Nepal’s financial accounts.
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