Nepal's economy to grow by 4.8 pct in 2017: ADB

Asian Development Bank (ADB) has projected that Nepal's economy would grow by 4.8 percent in the current fiscal year 2016-17 which is lower than Nepalese government's target of achieving 6.5 percent growth in the year.

Releasing its half-yearly "Macro-economic Update of Nepal" on Friday, the agency said that Nepal's economic outlook is moderately optimistic.

"Nepal's economic growth rate will hinges on the scale of recovery of agricultural output given the normal monsoon, the scope and pace of post-earthquake reconstruction and rehabilitation, budget execution, and remittance inflows," it said.

Nepal witnessed 14-year low growth of 0.77 percent in the last fiscal year 2015-16 which ended in mid-July as a result of prolonged blockade Nepal faced in its southern border points and the continued impact of the last year's earthquake, according to the government's estimate.

The ADB said Nepal witnessed better monsoon which might result in better output of agriculture sector while industrial and service sector output will be contingent upon the evolving political situation, reconstruction work, pace of budget execution, recovery of tourism sector and remittance inflows.

Remittance has been one of the key drivers of economic activities in Nepal in recent years as its size is around 30 percent of the country's economy.

However, growth rate of remittance inflow slowed in the last fiscal year as the number of Nepalese going for foreign employment decreased substantially.

Meanwhile, the ADB has projected the lower inflation this fiscal year compared to last fiscal year when average inflation of Nepal stood at 9.9 percent, according to Nepal's central bank.

Due to supply constraints caused by four and half month long blockade, prices of almost everything had soared during the period affecting the inflation.

"Better agricultural harvest due to the normal monsoon, subdued inflation in India, low international fuel and commodity prices and normalization of production and supplies since February 2016 will likely lower general prices of goods and services in FY2017," said the ADB, adding that demand-side pressures emanating from the earthquake-related fiscal stimulus could mount pressure on prices.