WB projects 2014 growth at 4.4pc

- POST REPORT, Kathmandu

Jun 11, 2014-

The World Bank (WB) has projected Nepal’s economic growth at 4.4 percent for 2014.

However, the country’s growth in following two years—2015 and 2016—will be disappointing, it has said. The lender’s Global Economic Prospects (GEP) report launched on Wednesday has projected Nepal’s GDP will grow by 4.3 percent in 2015 and 2016.

In South Asia, Nepal and Maldives are the only two countries whose economic growth is projected to slowdown in the next two years. The report shows Sri Lanka will have the strongest growth of 7.2 percent in 2014, while India will grow at 5.3 percent.

The report states Nepal’s fiscal balance moved into surplus in 2013, partly because of delays caused by insufficient capacity for public expenditure on capital projects. “However, sustaining fiscal consolidation could prove challenging for various reasons,” reads the report.

Among South Asian countries, Nepal has the lowest non-performing loans (NPLs). “NPLs as a share of total loans were the lowest in Nepal at 3.1 percent although there is anecdotal evidence of substantial ‘ever-greening’ of problems loans by banks,” says the report.

According to the WB, GDP growth in South Asia in 2014 will be at 5.3 percent, rising to 5.9 percent in 2015 and 6.3 percent in 2016. “Most of the acceleration is localised in India, supported by a gradual pickup of domestic investment and rising global demand,” says the report. The WB has projected India’s economic growth at 6.3 percent for 2015-16 and 6.6 percent for 2016-17.

According to the bank, South Asian countries, including Nepal, are vulnerable to political developments in Ukraine and Russia that could result in tighter international oil supplies, given the reliance of South Asia on imported crude oil. “An escalation of geopolitical tensions that cause crude oil prices to spike can significantly impact current account sustainability in the region,” states the bank. The WB says weak monsoon rains can have significant impacts on agricultural production, consumption, and GDP growth. “The weaker than average monsoons, perhaps triggered by El Niño weather conditions, could reduce regional GDP growth by half a percentage point or more,” says the report.

Published: 12-06-2014 10:04

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment