By Raghu Kshitiz
Nepal’s GDP growth of 6% is envisaged for Fiscal Year 2022
in anticipation of vaccination progress against the COVID-19 pandemic, regional
and global economic recovery from this pandemic, steady inflows of workers’ remittance,
and assumption of a good monsoon leading to better harvest this monsoon. But in
the long-term, the GDP annual growth rate is projected to grow by 4.1% only in
fiscal year (FY) 2022, up from an estimated growth of 2.3% in FY2021, according
to the latest Asian Development Outlook (ADO) 2021 Update, a report of the
Asian Development Bank (ADB).
As per the report, growth in the agriculture field will
likely be boosted by increased paddy plantation amid abundant rainfall this monsoon
season.
The report also says the country’s inflation will rise
modestly to 5.2% in FY2022, up from the projected 3.6% in FY2021, due to higher
global oil prices and a gradual recovery in domestic demand.
Nepal is currently beginning to experience the most
unexpected and far and wide discontinuance of financial action due to the flare-up
of the COVID-19 pandemic. According to a study by the ADB, the flare-up of this
disease will hit pretty much every area of the Nepali economy, shaving up to
0.13 percent off the total national output and delivering about 16000 people
jobless.
The worldwide COVID-19 Coronavirus pandemic has imposed both
a supply and a demand stock on Nepal's economy.
The deadly disease has affected people’s lives as well as the
public and private sectors. Banks and financial institutions are suffering in
loss of their investments in the hospitality and tourism sectors due to the pandemic
tourist slump.
One of the most impacted sectors is the tourism industry. Being
one of the largest industries which have been contributing over 10 percent to
Nepal’s total economy has faced the cancellation of all spring Himalayan
expeditions, including Everest climbing resulting in job loss of around 14,000 tours,
trekking, and mountain guides.
International tourist arrivals, which declined by 80.8% in
2020, may gradually recover, as trekking routes and expeditions resume. Hotels
and restaurants, travel, and tourism will likely take more time to recover to the
pre-pandemic level until the sustained repression of the pandemic.
The outcome is visible in the manufacturing industries too.
As most raw materials including pharmaceutical chemicals come from foreign
countries, the supply of these raw materials has decreased drastically.
The situation is frightening. Though the country is yet to face
the full impact and aftermath of the pandemic, this worldwide threat has
already created economic uncertainty. People are worried as yet we don’t know
much about this deadly virus and how deep and widespread the economic fallout
will be.
Not only pandemics, but political uncertainties as well as
recurrent natural calamities like floods and landslides, could also undermine
growth prospects. A weaker-than-expected regional and global recovery would
limit employment opportunities abroad for Nepali workers, constrain remittance
and earnings from exports, and diminish Nepal’s growth.
