Nepal’s Economy Expected to Grow by 4.9% in FY2025

KATHMANDU, 25 September 2024 – Nepal’s economy is set to grow by 4.9% in fiscal year (FY) 2025, an increase from the estimated 3.9% growth in FY2024, according to a new report by the Asian Development Bank (ADB). The report was presented at an event held at the Radisson Hotel in Kathmandu on Wednesday.

The Asian Development Outlook (ADO) September 2024 report highlights key areas driving this growth, including the recovery of domestic demand, increased spending on infrastructure, and a boost in tourism. Arnaud Cauchois, ADB Country Director for Nepal, said, “We expect economic growth to improve as demand increases, more money is spent on infrastructure projects, and tourism continues to recover.”

Agriculture is expected to do well, provided there is a good harvest, which depends on favorable weather conditions, especially the monsoon. The industrial sector will benefit from more electricity being generated, and the services sector, especially hotels and restaurants, will see growth due to higher numbers of tourists.

The ADB report also mentioned that Nepal Rastra Bank’s goal of keeping inflation under 5.0% in FY2025 is achievable, provided that there is a good harvest and India, Nepal’s main import partner, keeps inflation low. Although Nepal’s trade deficit has improved thanks to strong remittance inflows and more tourists, the country’s current account balance may see a small deficit of 1% of GDP in FY2025 as the economy continues to recover.

However, there are some risks. Geopolitical tensions, particularly in the Middle East, could hurt Nepal’s remittance income, and global economic problems could reduce tourism. Nepal also remains vulnerable to natural disasters and climate-related issues, which could affect growth.

The Asian Development Bank (ADB) has expressed its commitment to fostering a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while continuing its efforts to eliminate extreme poverty. Established in 1966, the bank is owned by 68 members, 49 of which are from the region.