Global slowdown could damage Nepal's growth prospects: ADB

KATHMANDU, March 31: The Asian Development Bank has warned that although Nepal has not yet been adversely affected by the global financial crisis, the country could find its prospects for growth damaged because of the deepening global economic slowdown. [break]



“This crisis complicates Nepal’s problems, as the country is already facing the grave challenge of sustaining the growth and the poverty-reduction gains of the past decade during the protracted and complex post-conflict transitional period,” said Paolo Spantigati of the ADB.



Speaking during the launch of Asian Development Outlook 2009, the annual report of the bank, Spantigati suggested that the government conclude the peace process soon and create more employment opportunities at home to offset the unwanted effects caused by the fragile political situation the adverse external environment – the two major challenges facing Nepal.



The report says that Nepal would not be able to escape some of the impact that the global slowdown would have on exports, remittances, tourist receipts and external assistance. It suggests that the government should be prepared to take the necessary fiscal and monetary policy measures to mitigate the effects of the fallout.



The ADB has also said that the amount of assistance the bank provides to Nepal will not be affected by the global crisis. “In fact, to counter the negative impacts of the slowdown, the ADB is ready to provide all the necessary assistance to Nepal” said Spantigati. He further added that the ADB would help the government of Nepal by working to improve Nepal’s infrastructure and civil works so that more jobs could be created in the country. He also emphasized the importance of continuing reforms to overcome the constraints faced by the country in the areas of investment and growth.



Asian Development Outlook 2009 praises the government for its maintaining macroeconomic stability and lauds the sharp growth the country has achieved in revenue mobilization. However, it stresses the need to increase development expenses to expedite development around the country and create more jobs and improve the business environment so that there is a growth in private investments.



The ADB has forecast that Nepal’s economy will grow at a rate of 3 percent in 2009 and 3.5 percent in 2010. It has projected that inflation will remain at 10 percent for 2009 and between moderate to 8 percent in 2010.

Related story

ADB supports Nepal’s digital transformation toward high‑impact...