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3pc growth likely for 2010
KATHMANDU, JUN 07 -
A World Bank report released on Monday has projected that Nepal's GDP growth in the next three years would hover between 4 to 5 percent. Growth in the fiscal year 2010 has been estimated to reach 3 percent.
"In the base case, the GDP is projected to grow by 3 percent in the fiscal year 2010," states the World Bank South Asia Economic Update. The growth rate is expected to rise to 4 percent in 2011 as agriculture recovers with the return of normal rainfall, added the report.
The World Bank report projects Nepal's growth rate for fiscal years 2012 and 2013 at 4.2 percent and 4.4 percent respectively. "In the high-case scenario, growth could reach 5 percent by the fiscal year 2013," states the report.
The government has recently revised its GDP projection for 2010 to 3.5 percent from the earlier estimate of 5.5 percent. Poor monsoon, slower remittance growth, surge in imports and tighter monetary conditions forced the government to revise the growth rate.
However, Nepal could achieve growth of around 5.5 to 6 percent if structural impediments are reduced. According to the World Bank, if Nepal is to unleash its growth potential in the medium and long run, it should address a number of structural problems. They include improving the business climate, addressing power shortages, improving infrastructure and resolving difficult labour relations along with political stability and improved security.
The report further says that reliance on remittances is the highest in Nepal; and without remittance flows, growth in consumption might have collapsed. According to the report, Nepal was unable to utilise remittance as rising remittance went to non-traded housing and land markets. The report applauds the government's fiscal management. There has been progress in revenue administration,
and a three-year budgeting framework is being established, said the report.
Rapid growth in Nepal's financial sector has stretched Nepal Rastra Bank's capacity to supervise and regulate it effectively. The rapid expansion of financial institutions and credit growth has fed asset price booms, especially in real estate, said the report.
Posted on: 2010-06-08 07:57
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