Nepal’s Economy to Grow by 4.5 Percent: World Bank
April 4, 2025 | Investopaper
The World Bank has projected Nepal’s economic growth rate to reach 4.5 percent in the fiscal year 2081/82 (2024/25), marking a 0.6 percentage point increase compared to the previous fiscal year (2080/81), which saw a growth rate of 3.9%. Despite the severe floods and landslides that struck the country toward the end of 2024, the World Bank noted a potential for modest economic recovery. In its latest report, Nepal Development Update: Leveraging Resilience and Implementing Reforms for Boosting Economic Growth, released on April 1, the institution highlighted expectations of improved economic performance this year compared to the last.
Key drivers of this growth include expansions in domestic trade, hydroelectricity, and paddy production. The report also forecasts that Nepal’s economy will achieve an average growth rate of 5.4 percent over the next two fiscal years (2082/83 and 2083/84), with the service sector—particularly information technology—playing a significant role. However, the World Bank emphasized the need for private sector-led growth to generate essential employment opportunities.
David Sislen, the World Bank’s Country Director for Maldives, Nepal, and Sri Lanka, stressed that Nepal must implement critical structural reforms to sustain its upward economic trajectory, drawing from its own history of resilience. The report also warned of potential risks, including geopolitical and trade uncertainties, declining loan quality in the financial sector, policy inconsistencies due to frequent civil servant transfers, and delays in capital budget execution.
Meanwhile, Nepal’s National Statistics Office has projected a 5.1 percent GDP growth rate for the second quarter of FY 2081/82, attributing this expansion to increased activity in transportation, construction, agriculture, electricity production, and financial intermediation. While all 18 economic sectors recorded positive growth during this period, underperformance in education, housing, food services, and other service sectors kept overall growth moderate. To meet the targets of Nepal’s 16th Five-Year Plan, Shivraj Adhikari, Vice Chairman of the National Planning Commission, stressed the need for stronger economic growth through efficient capital budget execution and timely completion of ongoing projects. The Nepal Development Update, published biannually, provides critical insights into the country’s economic progress while contextualizing recent developments within long-term global trends.
