Political stability could spur the economic growth, according to a multilateral donor.
Since politics has long been eclipsing economic agenda, Nepal needs to shift its focus to economic development while letting political process settle itself on due course, country director of the World Bank for Nepal and Bangladesh Johannes Zutt said, during an interaction in the Valley here today. " However, promotion of private sector investment, infrastructure development and reforms in the financial sector will ensure robust growth," he added, releasing World Bank's half-yearly macro economic report 'Nepal Development Update 2013'.
The World Bank report has also claimed that Nepal is heading toward economic recovery with a growth between four per cent and 4.5 per cent this year – though the forecast is a conservative one – up from last year’s 3.6 per cent.
If the country will be able to remove some of the bottlenecks in development of energy, transportation and financial sectors, Nepal can easily to move up to a higher growth trajectory, it added.
Though, Nepal is heading towards the recovery, it has to focus on energy generation, transport development to support trade and consolidate the financial sector, Zutt said, adding that the recent depreciation of Nepali rupees against the US dollar remains a concern but need not create a panic.
Reiterating World Bank's long standing stand on no need to change fixed currency peg with Indian rupee, he said that such a major policy shift should be based on clear policy objectives and in-depth analysis of likely economic outcome, including the long-term impact on Nepal's trade competitiveness.
The senior country economist at the World Bank’s Nepal office Aureilien Kruse, on the occasion, said that the timely election will ensure the economic growth and could contain the inflation in single digit.Though, its challenging to contain inflation in an election year, Nepal's inflation mostly depends on India's, where it is not very high and increased supply of food grains due to favourable monsoon will also support in taming inflation, he said, adding that Nepal suffered from under-investment from both the public and private sectors.
Nepal’s public investment declined 19.2 per cent in the fiscal year 2011-12 and 18.8 per cent in the last fiscal year 2012-13, the World Bank report stated.