KATHMANDU, April 10: The World Bank (WB) has projected Nepal’s economic growth rate to moderate at 2.3 percent in the current fiscal year (FY), down from 4.6 percent of the last FY.
The WB estimates slow growth of Nepal’s economy at a time when the government has been claiming to achieve gradual improvements in production services, and consumption sectors. Based on the claim, the government owned National Statistics Office has projected to achieve economic growth of around four percent this FY.
Revised interest rate corridor system introduced
Unveiling its publication ‘Nepal Development Update, Growth Under Pressure: Navigating Domestic and Global Shocks,’ the WB has attributed the slow economic growth to the impact of the ongoing conflict in the Middle East and the lingering effects of the September 2025 unrest. According to the multilateral donor organisation, the services sector is expected to be most affected this year, due to slower tourism activity, higher transport costs, and potential supply chain disruptions.
A prolonged conflict in the Middle East could dampen tourist arrivals, reduce remittance inflows, weaken consumption, and slow overall economic activity, states the report. On the upside, improved political stability following the elections in March, sound macroeconomic management, the availability of ample buffers, and continued structural reforms could strengthen investor confidence, boosting private investment and growth.
“Looking ahead, reconstruction activities, continued hydropower expansion, and consumption linked to the 2027 subnational elections are expected to support a pickup in growth to an average of 4.4% over FY27/28.”
David Sislen, division director of WB for Maldives, Nepal, and Sri Lanka, said boosting private sector-led growth will be critical to strengthening economic resilience and creating more jobs in Nepal. “To achieve this, Nepal must improve the business environment, develop foundational infrastructure, mobilize private finance, and support priority sectors such as tourism, the IT sector, and agribusiness,” he added.
The WB also projects growth in South Asia to slow to 6.3 percent in 2026 from seven percent in 2025, due to disruptions in global energy markets. Despite the near-term slowdown, South Asia continues to grow faster than other emerging-market and developing economies. Growth is expected to recover to 6.9 percent in 2027.
