KATHMANDU, Nov 13: The World Bank has projected Nepal’s economic growth to slow down sharply to 2.1 percent in 2026, citing the Gen Z uprising and subsequent political instability as key factors behind the downturn. The forecast marks a steep decline from the earlier estimate of 4.6 percent.
Unveiling the Nepal Development Update report in the presence of Finance Minister Rameshwar Khanal, the World Bank stated that the unrest and uncertainty following the youth-led movement have significantly weakened investor confidence and disrupted services—particularly affecting the service sector, which remains the most impacted area.
Govt revises down growth forecast to 6 pc
The report anticipates a rebound in 2027, with the growth rate expected to climb to 4.7 percent as reconstruction efforts gain momentum. However, the Bank warned that prolonged uncertainty could further discourage private investment unless political stability and sound fiscal management are ensured.
According to the report, total capital expenditure by federal, provincial, and local governments stood at 7.9 percent of GDP last fiscal year—significantly below the 10–15 percent of GDP investment required to meet Nepal’s infrastructure needs.
The World Bank emphasized that beyond short-term recovery, Nepal must prioritize long-term structural reforms to achieve sustainable and inclusive growth.
The World Bank publishes the Nepal Development Update twice a year, providing insights into the country’s macroeconomic performance, fiscal trends, and policy priorities.
