The Asian Development Bank (ADB) has projected that Nepal's economy could grow as high as 6.2 percent in the current fiscal year 2016-17.
The ADB attributed the growth to a bumper agricultural output, possibility of a pick-up in post-earthquake reconstruction and an improving investment climate.
In its half-yearly "Macro-Economic Update Report" released on Tuesday, the Asian lender projected that Nepal's economy would grow between 5.2 percent and 6.2 percent this fiscal year ending mid-July.
Nepal's economy grew 0.7 percent in the last fiscal year, a 14-year low, due to trade blockade allegedly by India and the impact of the deadly earthquake in April 2015.
If the projected upper limit of the economic growth is achieved, it will be the highest growth in the last 22 years.
Nepal witnessed a high growth in the fiscal year 1993-94 when the Himalayan nation initiated massive legal reforms toward market economy.
In that fiscal year, Nepal's economic growth was 7.6 percent, the highest ever over the previous 26 years, according to Nepal's Finance Ministry statistics.
The ADB, which had projected Nepal's economy to grow by just 4.8 percent in August last year, said it made the upward revision in growth due to better outlook for agriculture and industrial sectors.
The higher forecast is based on the assumptions of a stronger-than-expected agricultural output growth and the country's political situation as a local elections day approaches, said Kenichi Yokoyama, country director for ADB for Nepal.
Nepal is scheduled to hold local level election on May 14 for the first time in 19 years. The above average monsoon rains and the smooth availability of agricultural inputs, particularly chemical fertilizers, are likely to significantly boost agricultural output, according to the ADB.
Preliminary estimates by Nepal's Ministry of Agriculture Development show a 21.7 percent in increase in paddy output this fiscal year. Similarly, maize, millet and buckwheat are projected to grow by 1.2 percent, 1.2 percent and 1.4 percent, respectively.
Likewise, notable improvement in power supply and the resumption of manufacturing activities following a lull after the 2015 earthquakes and the supplies disruption in 2016, will underpin a robust manufacturing sector growth, the ADB said.
Latest comments