Nepal's economy is anticipated to demonstrate resilience amid economic challenges, with the World Bank projecting a growth of 4.5 percent for the fiscal year 2025, compared to 3.9 percent in fiscal year 2024. This growth is attributed to increased domestic trade, hydropower generation, and paddy production, as highlighted in the World Bank's latest report, "Nepal Development Update: Leveraging Resilience and Implementing Reforms for Boosting Economic Growth."
Looking further ahead, the report forecasts an average annual growth rate of 5.4 percent for fiscal years 2026 and 2027, primarily fueled by the services sector. David Sislen, World Bank Country Division Director for Maldives, Nepal, and Sri Lanka, emphasized the importance of private sector-led growth, stating, "Boosting private sector-led economic growth is critical to creating the jobs that Nepal needs. To achieve this, Nepal can build on its impressive track record of resilient growth backed by implementing key structural reforms."
However, the report acknowledges several downside risks, such as geopolitical and trade-related uncertainties, the potential for deteriorating asset quality within Nepal's financial sector, and risks tied to policy inconsistency due to frequent bureaucratic shifts. Delays in executing capital expenditure budgets also pose challenges.
Professor Dr. Shiva Raj Adhikari, Vice Chairman of the National Planning Commission, remarked, "The Nepal Development Update provides valuable insights on recent economic developments and highlights Nepal’s resilient growth. Boosting growth further to meet the country’s 16th Plan targets requires effective execution of the capital budget and timely completion of ongoing projects."
Produced biannually, the Nepal Development Update offers an in-depth analysis of key economic developments from the past year, placing them within a long-term global context.