ADB projects Nepal’s GDP to slow down to 3.5% for 2013

The Asian Development Bank (ADB) has projected Nepal’s gross domestic product to slow down to 3.5 per cent for 2013. Releasing the Asian Development outlook in Kathmandu today , the report stated that due to a shortage of fertilizers, poor monsoon season, low investor confidence and the lack of a full budget, which is also causing funding shortages for ongoing development activities. The prospects of a lower agriculture harvest, wage pressures, further upward adjustment of administered fuel prices, continued power shortages and other supply-side constraints are expected to push inflation to 10.5 per cent in 2013.

Country Director for Nepal Kenichi Yokoyama said promoting an enabling business environment and political stability are key to improving economic performance in Nepal.He added that, developing infrastructure bases, particularly power, strengthening institutional capacities, and promoting strategic and proactive policies are urgently needed to improve investor confidence in Nepal.

With a favorable monsoon, adequate fertilizer supplies, the timely adoption of the full budget, and moderate expansion of remittances, ADB has forecast GDP growth to rebound to 4.2 per cent in 2014. Assuming a good harvest and cautious monetary policies, inflation in 2014 is projected to ease only slightly to 9 per cent as most of the underlying pressures of the previous year persist.
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