World Bank projects Nepal growth at 3.7%

By A Staff Reporter, Kathmandu, Oct. 7: The World Bank has projected a slowed economic growth rate of 3.7 per cent for Nepal in the Fiscal Year 2026/27 owing to the disruptions caused by the Bhotekoshi flood on August 26 to industry and services. 

The projected growth rate of the Gross Domestic Product (GDP) is below the estimated economic expansion in FY 2025/26 when the country achieved 3.9 per cent. The economic growth rate in FY 2024/25 was 4.4 per cent. 

The South Asia as a region is expected to achieve 6.9 per cent growth this year, with strong domestic demand keeping the region resilient to global shocks. Growth is expected to slow to 6.7 per cent in 2027.

However, reconstruction and rehabilitation activities are expected to begin supporting economic activity, supporting a recovery in growth to 5.2 per cent in FY2027/28 in Nepal, the WB said in its report 'Nepal Development Update, Building Back Differently for the Future' published on Tuesday. 

However, the pace and strength of the recovery will depend on the speed and scale of reconstruction and restoration efforts, warned the multilateral donor.

"Industry is expected to be the primary drag on growth, reflecting extensive damage to hydropower, solar energy, electricity transmission, and transport infrastructure, which will constrain electricity generation, production, and the movement of goods," read the report. 

Services are expected to be affected through disruptions to trade, transport, tourism, and financial activity. Agricultural losses, while limited in the effects on aggregate output, are expected to have significant impacts on livelihoods in affected areas.