9th April 2025, Kathmandu
The Asian Development Bank (ADB) has projected that Nepal will experience a 4.4% economic growth in the current fiscal year. This is an improvement compared to last year’s growth of 3.9%. For the next fiscal year, ADB expects growth to rise to 5.1%.
Nepal Economy Growth Forecast 2025
Global Economic Factors Impact Growth
Ian Hanson, the Chief Economist at ADB’s Nepal Resident Mission, explained that global factors, particularly the U.S. trade policies, have impacted the growth projections for the Asia-Pacific region. As a result, the region’s growth forecast has dropped to 4.9%. Additionally, U.S. economic growth is expected to decline from 2.8% last year to 2% this year and 1.9% next year. The ongoing U.S.-China trade war is also affecting global growth. China, in particular, is facing major challenges due to the trade tensions with the U.S.
However, despite these challenges, South Asia is projected to see growth rise from 5.8% last year to 6% this year. This is a positive development for the region.
Productive Sector Growth in Nepal
In Nepal, the productive sector is expected to grow significantly. According to ADB, there has been a 7.7% increase in loans to the construction sector during the first six months of the fiscal year. This trend is expected to continue, with productive industries seeing more loans. Manwar Singh Khadka, an economist at ADB’s Nepal Resident Mission, emphasized that the energy sector will play a crucial role in this growth. Moreover, the Nepal Electricity Authority predicts an increase of 900 MW in energy production.
Services Sector to Benefit from Tourism and Investment
The services sector is also likely to grow positively. This is mainly due to the increase in tourism arrivals. As more tourists visit the country, the services sector is set to benefit. The trade and transportation sectors are also expected to show improvement, contributing to overall economic growth. Moreover, government reforms aimed at encouraging both domestic and foreign investment are expected to have a positive impact on the services sector. These reforms should attract more investments and contribute to growth in various service industries.
Inflation Expected to Stay Under Control
ADB has projected that inflation will remain at 5.2% for the current fiscal year. The inflation rate is expected to slightly decrease to 5% in the next year. These figures reflect an attempt to keep inflation within a manageable range despite various external challenges.
World Bank’s Outlook for Nepal
The World Bank has also shared a similar growth forecast for Nepal. In its latest Nepal Development Update, the bank has predicted that Nepal’s economy will grow by 5.1% in the current fiscal year. This aligns with ADB’s projections, showing a positive outlook for Nepal’s economy despite global uncertainties.
Conclusion
In conclusion, Nepal’s economy is expected to experience steady growth, driven by improvements in sectors such as construction, energy, services, and tourism. Although global economic uncertainties, such as the U.S.-China trade war, may have some impact, Nepal’s economy is set to grow. With ongoing government reforms and improvements in key sectors, the country is likely to see continued economic progress in the coming fiscal years.
For more: Nepal Economy Growth Forecast 2025