Nepal's economy seen by 5.8 pc in current fiscal year

The finance minister said on Sunday May 29 that Nepal's economy is expected to expand by 5.8 per cent in the current financial year, despite a fall in COVID 19 cases. The growth estimates were higher than earlier projections of 7 per cent growth for the current fiscal year, as rising energy and food prices have hit consumer spending and firms' investments.

Nepal has ended almost all of the pandemic-related restrictions, which were imposed to curb the spread of the novel coronaviruses, and taken several measures to revive the economy hit by the epidemic.

Finance Minister Janardan Sharma said that as the impact of COVID 19 is minimal, the economic and social life is normal and that the annual budget is beginning to be presented in the parliament for the new financial year beginning in mid-July.

He said economic indicators were satisfactory except for those relating to the external sector. Ishwari Prasad Bhandari, a director at the Central Bureau of Statistics CIS said that good economic growth was due to a rise in hydroelectric power generation, growth in construction and wholesale and retail trade.

Nepal has seen a surge in food and energy prices as annual retail inflation climbed to a five-year high of 7.3 per cent, amid the risk of social unrest as imports of goods like fuel, coal and edible oil become costlier.

Sharma said the government would reduce fuel prices which were up to 12.5 per cent last week, because global prices had spiked after Russia invaded Ukraine, but gave no details.

The government has imposed a ban on luxury goods imports until mid-July due to dwindling forex reserves, which fell 18.2 per cent to US $9.61 billion from mid-April, according to the central Nepal Rastra Bank NRB data.

Economic activities would not be affected by the end of the year because of the pandemic, according to officials.