2025-04-20-世界银行-尼泊尔发展更新_2025年4月_利用韧性和实施改革促进经济增长（英）_36页_8mb

Nepal Development Update Summary

Core Content

This Nepal Development Update, published in April 2025, provides an analysis of recent economic developments and outlines the outlook, risks, and challenges for the country's economy. It covers the performance of the real, external, monetary, and fiscal sectors, and discusses the implications of these developments on growth, inflation, and foreign exchange reserves.

Main Points

Recent Economic Developments

• Economic Growth: Nepal's real GDP growth accelerated in the first half of FY25 (H1FY25) to 4.9 percent, up from 4.3 percent in H1FY24, driven by growth in agriculture and industry.
• Sectoral Performance:
  • Real Sector: Services sector growth slowed to 5.1 percent from 5.2 percent in H1FY24, due to a decline in tourism and financial activities. However, wholesale and retail trade and transportation and storage showed growth.
  • Industrial Sector: Grew by 6.6 percent in H1FY25, with electricity and manufacturing sub-sectors being key contributors. The construction sub-sector remained unchanged.
  • Agricultural Sector: Grew by 3.6 percent, mainly due to increased paddy production and yield, supported by favorable monsoon conditions and improved seed availability.
• Inflation: Headline inflation eased to 5 percent in H1FY25 from 6.5 percent in H1FY24, with non-food and services inflation declining significantly. However, food and beverage inflation remained high at 7.5 percent, particularly due to a 26.6 percent increase in vegetable prices.
• Current Account: The current account surplus (CAS) declined from 2.8 percent of GDP in H1FY24 to 2.4 percent in H1FY25, due to lower remittance inflows. Despite this, foreign exchange reserves remained robust.
• Monetary Policy: The central bank maintained a cautiously accommodative stance, reducing the policy rate and interest rate corridor by 50 basis points in July 2024, contributing to excess liquidity and low lending rates.
• Financial Sector: Non-performing loans (NPL) surged to 4.9 percent, prompting the central bank to reduce the countercyclical buffer to zero percent in FY25 to address the situation.
• Fiscal Sector: The fiscal deficit narrowed by 0.5 percentage points of GDP in H1FY25, reaching near balance. Revenue growth was broad-based, with contributions from higher excise duties, personal income tax, and non-tax revenue. Expenditure remained subdued, with lower interest payments and fiscal transfers.

Outlook, Risks, and Challenges

• Growth Projection: The economy is expected to grow by 4.5 percent in FY25 and average 5.4 percent annually in FY26-FY27.
• Sectoral Outlook:
  • Services Sector: Expected to be a primary growth driver, supported by recovery in merchandise imports and trade. However, tourism disruptions from the Tribhuvan International Airport (TIA) upgrade may hinder growth in the short term.
  • Industrial Sector: Projected to grow robustly in the medium term, driven by electricity and construction expansion.
  • Agricultural Sector: Expected to grow by 3.2 percent in FY25, with potential for higher growth in FY27 if favorable weather conditions persist.
• Inflation Outlook: Inflation is expected to moderate to 5 percent in FY25 and average 4.4 percent over FY26-FY27, supported by lower non-food and services inflation and a favorable monsoon season.
• Current Account Outlook: The current account surplus is expected to narrow over the medium term due to lower remittances and a widening trade deficit. However, foreign exchange reserves are projected to remain at prudent levels.
• Fiscal Outlook: The fiscal deficit is expected to stay at 2.5 percent of GDP in FY25 and rise slightly to 2.9 percent by FY27, driven by higher interest payments and capital spending. Revenue growth will depend on the implementation of the Domestic Revenue Mobilization Strategy.
• Key Risks:
  • External Risks: Geopolitical uncertainties and trade restrictions could push up commodity prices.
  • Domestic Risks: Continued reliance on remittances and tourism, vulnerability to financial sector asset quality deterioration, frequent bureaucratic reshuffles, and Nepal's status on the FATF Grey List.
  • Implementation Risks: Delays in critical capital expenditure reforms may hinder infrastructure development and limit long-term growth potential.

Key Information

• Fiscal Year: Nepal's fiscal year begins on July 16 and ends on July 15 of the following year.
• Remittance Trends: Remittances fell from 12.9 percent of GDP in H1FY24 to 12.4 percent in H1FY25, mainly due to a sharp decline in Nepali workers migrating to Malaysia.
• Tourism Impact: The TIA upgrade caused major disruptions in tourism, with a decline in tourist arrivals and reduced operating hours.
• Monsoon Impact: A favorable monsoon season contributed to higher agricultural output, particularly in paddy production, despite the September 2024 floods.
• Foreign Exchange Reserves: Remained adequate, covering approximately ten months of imports by the end of FY27.
• Data Sources: The report draws on data from the National Statistics Office (NSO), Nepal Rastra Bank (NRB), and World Bank staff calculations.

Conclusion

Nepal's economy showed resilience and growth in the first half of FY25, despite challenges from natural disasters and tourism disruptions. While the services and industrial sectors are expected to drive growth in the coming years, the country faces risks from external and domestic factors, including geopolitical tensions, financial sector challenges, and policy implementation delays. The outlook remains cautiously optimistic, provided that reforms and stability are maintained.