Publication:
Nepal Development Update, April 2024: Nepal’s Economy on a Recovery Path but Private Investment Remains Low

Loading...
Thumbnail Image
Files in English
English PDF (9.35 MB)
82 downloads
English Text (334.44 KB)
4 downloads
Date
2024-04-02
ISSN
Published
2024-04-02
Author(s)
Abstract
Nepal’s economy saw improved growth in the first half of FY24 (H1FY24) compared to FY23, supported by the services sector, helping its economic growth rebound from a low of 1.9 percent in FY23 to a forecast of 3.3 percent in FY24. Accommodation and food services led the way, fueled by a significant rise in tourist arrivals. Financial and insurance activities also expanded, although there was a contraction in wholesale and retail trade. The industrial sector contributed to growth as well, supported by higher hydroelectric production. In agriculture, there was an increase in paddy production, aided by improved seed availability and favorable weather conditions. Private consumption drove growth on the domestic demand side, supported by a substantial increase of remittance inflows. However, since H1FY21, remittances growth has not supported higher imports of consumption goods. Private investment remained sluggish, as evidenced by decreased imports of capital and intermediate goods. On the other hand, public consumption and investment contracted, driven by austerity measures and lower revenue collection. To mitigate the revenue shortfall, the government adjusted its FY24 budget downward through mid-term reviews, revising both revenue and spending targets. Moreover, there is also the need for improved budget execution efficiency, especially for sub-national governments whose budget execution rates have lagged the federal government’s. Despite a small increase in public debt, it remains moderate and sustainable, supported by a significant share of concessional external loans and prudent fiscal management.
Link to Data Set
Citation
World Bank. 2024. Nepal Development Update, April 2024: Nepal’s Economy on a Recovery Path but Private Investment Remains Low. © Washington, DC: World Bank. http://hdl.handle.net/10986/41336 License: CC BY-NC 3.0 IGO.
Report Series
Other publications in this report series
Journal
Journal Volume
Journal Issue
Associated URLs
Associated content
Citations