The World Bank has projected that Nepal's economic growth will rise from 3.9% in 2024 to 5.1% in 2025. This growth will be driven by increased tourist arrivals, hydropower production, and paddy yields. However, the report also highlighted risks, including high non-performing loans, delays in capital expenditure, and potential regional instability affecting tourism and demand.
Key Risks Identified in Nepal's Economic Outlook
The World Bank warned of several risks to Nepal's economic growth, such as policy inconsistencies affecting investment and possible economic shocks in Gulf countries and Malaysia, which could reduce remittance flows. These remittances play a crucial role in household consumption and poverty reduction in Nepal.
Reforms Essential for Nepal’s Long-Term Growth
David Sislen, the World Bank's Country Director for Nepal, stressed the need for continuous reforms in infrastructure, governance, and the private sector. He emphasized that improving the management of remittances and creating opportunities for skilled workers within Nepal will be vital for sustainable economic development.
