December 13: The World Bank’s Nepal Development Update launched on Thursday (December 12) projects continued strong growth with an average annual rate of 6.5 percent in the medium term, driven by investments in the tourism sector, particularly the Visit Nepal 2020 program, including efforts to increase air connectivity.
A statement issued by the World Bank says industrial growth is likely to be supported by construction activities, investments in the cement and hydropower sectors, and improved capacity utilization in the manufacturing sector.
The Nepal Development Update notes that import growth will slow down as the government implements its program to keep the fiscal deficit in check. According to the World Bank, this should help contain the trade deficit.
Inflation is expected to pick up slightly but will remain below 5 percent during the forecast period assuming stable agricultural production, regular supply of electricity, and low inflation in India, the statement added.
The World Bank suggested the government to focus on strengthening exports.
“Increased exports will be critical to sustained growth over the medium-term. It will be important for government to continue with reforms to attract foreign investment,” said Dr Kene Ezemenari, World Bank’s senior economist who led the team that produced the update.
The World Bank currently supports 25 active investment projects in Nepal with $2.4 billion dollars in commitments from IDA.