It is predicted that Nepal’s economy will grow by 4.1 percent (at current market prices) in fiscal year (FY) 2022, up from an estimated growth rate of 2.3 percent in FY2021, according to the most recent Asian Development Outlook (ADO) 2021 Update, which is the flagship publication of the Asian Development Bank (ADB).
“The current vaccination campaign against COVID-19 will be a major contributor to growth, as the national immunisation plan continues to be critical to Nepal’s economic recovery,” said Arnaud Cauchois, Country Director of the Asian Development Bank in Nepal. According to the report, “Downside risks include an unknown trajectory for COVID-19, a likely rise in COVID-19 cases, and following severe containment measures, which might reverse the modest economic recovery in fiscal year 2021.”
According to the report, more paddy planted is expected to spur growth in Nepal’s agriculture this monsoon season, which would coincide with sufficient rainfall. The output of the industry is predicted to increase as a result of a significant increase in export volume and better domestic demand, as the rollout of the national immunisation programme will result in a gradual reduction in infection rates.
The federal government’s fiscal policy for fiscal year 2022 is primarily focused on upgrading the nation’s health-care infrastructure. The Federal Reserve will maintain its accommodative monetary policy through the establishment of a specialised refinancing facility, concessional loans for key projects, and assistance to affected enterprises. The expansion of services will be accelerated as a result of increased economic activity in the wholesale and retail trade, transportation, and financial services, as well as the nationwide implementation of the immunisation programme.
It is possible that international tourism arrivals, which fell by 80.8 percent in 2020, may begin to recover gradually as trekking routes and expeditions are reopened. Hotels and restaurants, travel, and tourism will most certainly take longer to recover to their pre-pandemic levels until COVID-19 has been successfully contained.
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