Asian Development Bank (ADB) Projects 4.9% Economic Growth for Nepal in FY 2024/25
The Asian Development Bank (ADB) has projected that Nepal’s economy will expand by 4.9% in the fiscal year 2024/25, surpassing the estimated growth of 3.9% from the previous fiscal year. This forecast was highlighted in ADB’s latest Asian Development Outlook report, which attributes the anticipated growth to a combination of rising domestic demand, an increase in capital expenditure, and a strong recovery in tourism-related services.
According to Arnaud Coffey, ADB’s Country Director for Nepal, “The uptick in domestic demand, accelerated infrastructure spending, and the revival of tourism will play a key role in boosting Nepal’s gross domestic product (GDP).” The report also emphasizes that favorable weather conditions have allowed timely paddy plantation, contributing to the expected growth in the agricultural sector, which remains crucial to Nepal’s economy.
Moreover, the expansion of electricity production is set to bolster industrial growth, while a sharp rise in tourist arrivals will benefit the hospitality sector, particularly accommodation and food services. Nepal's wholesale and retail trade, transportation, storage, and various household-related business activities are projected to strengthen as a result of this economic momentum.
The report notes that Nepal Rastra Bank’s target of capping inflation at 5.5% for FY 2024/25 is achievable, driven by favorable agricultural harvests and the moderation of inflation in India, Nepal’s key trade partner. With stable external conditions and proactive fiscal measures, inflation is expected to remain within this target range.
External Risks and Challenges
While the outlook for Nepal remains positive, ADB has highlighted some risks that could impact the economic forecast. A geopolitical crisis in the Middle East, for instance, could affect the inflow of remittances to Nepal, pushing up fuel and food prices. Additionally, global economic downturns may limit Nepal's potential tourism revenue. ADB has also pointed out that natural disasters and climate-related events pose a significant long-term risk to Nepal’s economic resilience.
Despite these challenges, Nepal’s external sector showed improvements in FY 2023/24, with a reduction in the trade deficit, strong remittance inflows, and a surge in tourist arrivals. The current account deficit is expected to reach 1% of GDP in FY 2024/25, a slight reversal from the 0.9% surplus seen last year due to increased remittances and recovery efforts.
ADB’s Commitment to Sustainable Development
ADB reiterated its commitment to fostering inclusive, resilient, and sustainable development in Nepal and the broader Asia-Pacific region. The bank continues to work toward reducing extreme poverty and promoting long-term economic growth through targeted financial and technical assistance.
Established in 1966, ADB is owned by 68 members, with 49 from the Asia-Pacific region. Its ongoing efforts to support Nepal reflect its broader mission to promote economic stability and development across Asia.
