World Bank forecasts 3.8 per cent economic growth
The country is going to witness much lower economic growth rate than the government has targeted.
According to the World Bank report Global Economic Prospectus 2014, Nepal is going to see 3.8 per cent growth in the year 2014, a little improvement than a year ago’s 3.6 per cent, but much lesser than the government’s target.
Slower government expenditure – especially capital expenditure – despite timely monsoon that might boost agriculture growth, is going to hit the economic growth as the government has spent only around 13 per cent to rs 11 billion of the capital expenditure – out of Rs 85.10 billion capital expenditure allocated to achieve 5.5 per cent GDP growth.
The country is planning to graduate from the current Least Developed Country (LDC) to developing country status and it needs around six per cent growth rate to graduate to the next level. However, the slow government expenditure and low private sector borrowing is neither going to help create employment nor boosting the growth.
The World Bank has projected 4.4 per cent growth rate for 2015 and 5.2 for 2016.
According to senior economist Prof Dr Madan Kumar Dahal, over the last five years Nepal’s average economic growth is terribly low confined to 3.5 per cent, lowest in the South Asia region. “The whole gamut of development is entirely attributed to foreign aid comprising loans and grants, for internal resource mobilisation is extremely inadequate to supplement capital expenditure and, unfortunately, expenditure efficiency is very low,” he said, adding that Nepal’s economic development is a challenging proposition and it is akin to traveling on the silk road. “The economy is passing through a critical phase of low level equilibrium trap circumscribed by poverty and stagnation in conjunction with structural constraints such as high cost economy, subsistence agriculture and alarmingly growing dependency.”
In addition, conspicuous inefficiency, mounting corruption and inordinately poor governance are the prime master-bottlenecks to economic development, he added.
Though the incumbent has promised to handover a stable economy to the elected government, the new government is going to face a challenge to expedite capital expenditure and must strike on to resolving the issues and crises facing the economy by devising pragmatic strategies covering short run, medium and long-term perspectives.