Nepal to miss economic growth target amid tourism decline
The Himalayan nation of 29 million people will fall short of its economic growth target_ a top Nepal's government official said_ underscoring the troubled state of an economy grappling with a pandemic- induced loss of tourism_ a widening trade deficit and soaring commodity prices.
Current month_ Nepal's imposed curbs on imports of luxury goods in a bid to rein in outflows of its dwindling foreign exchange reserves and suspended its central bank governor_ stoking concerns about a potential economic crisis.
Nepal's GDP target of 7.0 per cent growth for the fiscal year tomid-July will be missed and growth could be" limited to only4.0 per cent.
Sky-high prices for crude oil_ coal and edible oils in the wake of Ukraine-Russia war have battered Nepal's economy which had been gradually recovering from large losses of tourist dollars during the Covid pandemic.
Deependra Bahadur Kshetry_ a former governor of central bank of nepal_ said the biggest worry was the country's widening trade deficit which could grow to equal the size of the government s annual budget. This is an alarming trend and needs to be controlled_ Kshetry said.
The trade deficit expanded34.5 per cent year-on- year to1.16 trillion Nepali rupees ($9.5 billion) in the first eight months of the financial year as import costs surged.
Fuelled by high commodity prices_ surging inflation is also making life much tougher for many Nepalis. Bahadur Kshetry said retail inflation_ presently at a five- year high of7.0 per cent_ could reach double- digit numbers by the end of the fiscal year.
Nepal's economic woes have draw comparisons with Island nation Sri Lanka_ though the situation in Colombo is much more severe. Sri Lanka faces a sovereign default and its economic crisis has prompted protests calling for the ouster of President Gotabaya Rajapaksa.
The World Bank on Wednesday warned rising global commodity prices could cut Nepal's growth by0.2 percentage points this financial year to3.7 per cent and0.4 percentage points coming year to4.1 percent.
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