Quake-ravaged Nepal's GDP growth is likely to further slip to a dismal 1.5 per cent this year from 3 per cent it achieved last year, the Asian Development Bank today forecast and said recovery in 2017 is contingent on accelerating reconstruction and restoring trade to normal.
Nepal's GDP fell from 5.1 per cent in 2014 to 3 per cent in 2015 mainly due to low remittance, devastating quakes and disruptions in supply, the ADB Outlook 2016 report said.
The Manila-based multilateral bank, however, projected that the growth could jump to 4.8 per cent in 2017, provided it has a favourable monsoon and other factors remain positive.
The report said GDP is expected to expand in 2017 if Nepal attains political stability, accelerate post-earthquake reconstruction and the monsoon remains favourable.
Growth is expected to slide markedly in 2016, affected by reconstruction delays, extended trade and transit disruptions as minority groups object to features of the newly-announced Constitution, and unfavourable monsoon, the report said.
"Recovery in 2017 is contingent on accelerating reconstruction and restoring trade and transit to normal," it said.
The report said the inflation averaged 7.2 per cent this fiscal year, down from 9.1 per cent a year earlier. It projected inflation to rise to 10.5 per cent, higher than the target of 8.5 per cent set by the central bank.
The bank expressed concerns over the slow pace of reconstruction in the aftermath of major quakes in April and May last year.
"More than 8 months into the fiscal year, only a small fraction of the reconstruction budget has actually been spent, reflecting institutional and procedural bottlenecks that constrains the timely execution of capital works," it said.
Delay in setting-up the national reconstruction authority and limited capacity of sector institutions that oversee private housing, schools, hospitals and roads to assess the damage, plan and implementation of reconstruction have been identified as major drawbacks.
ADB Country-Director Kenichi Yokoyama has advised the Nepal government to focus on speeding up the reconstruction, saying it "would ultimately help in the recovery of the national economy which has been severely affected due to the earthquake and other unfavourable incidents."
Donor countries have pledged USD 4 billion for reconstruction during last year's donors meeting held in Kathmandu and it is a huge amount, which can totally change the economic scenario for Nepal, he said.
