Nepal’s economy projected to grow by 4.9% in 2025: ADB report

KATHMANDU: Nepal's GDP is expected to rise by 4.9% in 2025, up from a projected 3.9% growth in 2024, according to the most recent Asian Development Bank (ADB) Asian Development Outlook research. Increased infrastructure spending, a rebound in domestic services, and tourism are all credited for this economic boom.

The ADB's country director, Arnaud Cauchois, predicts that faster infrastructure development, more domestic demand, and Nepal's booming tourism industry will all contribute to the country's GDP growth. The overall economic performance of the nation is expected to be impacted by these factors.

In Nepal's agriculture sector, timely paddy planting and perfect monsoon conditions are expected to yield strong harvests. Improved electricity generation capacity is expected to fuel growth in the industrial sector, while increased visitor arrivals and enhanced housing, food services, and retail trade will assist the services sector.

Strengthening the domestic demand rebound is expected to require more capital spending on infrastructure projects and a moderately accommodating monetary policy. Transport, storage, wholesale and retail trade, and real estate activities will all rise as a result, supporting the economy's continued growth.

According to the ADB assessment, inflation in Nepal would stay within the 5.0% target set by the Nepal Rastra Bank for 2025. This is presuming a typical harvest season and a little decrease in India's inflation rates, which is Nepal's main import source and trading partner.

Nepal's trade deficit decreased while its current account surplus rose in 2024 as a result of significant remittance inflows and a surge in tourist visits. With the economy expected to keep improving, the current account balance is expected to go back to a deficit in 2025, or about 1% of GDP.

The economy's higher demands during its reconstruction and the decline in remittance inflows as international economic conditions improve are the primary reasons for this shift from a 3.9% surplus in 2024 to a deficit in 2025.

By 2025, a number of sectors of Nepal's economy should be stronger, although external concerns like shifting trade balances and remittance inflows remain a cause for concern.