Kathmandu, February 19, 2019: International Monetary Fund (IMF) showed expansion of GDP of Nepal by 6.3 percent and inflation increased by 4.2 percent due to growth in manufacturing and tourism-related sectors.The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation 1 with Nepal.
Nepal’s economy is enjoying a solid expansion, supported by ongoing reconstruction activity following the 2015 earthquakes and increased growth in manufacturing and tourism-related sectors. Real GDP is estimated to have expanded by 6.3 percent in Fiscal Year 2017/18 (mid-July 2017 to mid-July 2018), and headline inflation averaged 4.2 percent, held down by subdued food-price inflation.
Government expenditure increased by 32.4 percent (year-on-year) in Fiscal Year 2017/18, propelled by Nepal’s transition to fiscal federalism and ongoing reconstruction spending. As in previous years, spending was concentrated in the last quarter of the fiscal year. Revenue growth was also substantial (18.9 percent). Nevertheless, the fiscal deficit increased to 6.5 percent of GDP, from 3.1 percent of GDP in Fiscal Year 2016/17.
Private sector credit has been expanding very rapidly in recent years, posting 24 percent growth in December 2018, following average growth rates above 20 percent since Fiscal Year 2015/16.
The current account moved sharply into deficit position (8.2 percent of GDP in Fiscal Year 2017/18), following a modest deficit of 0.4 percent in Fiscal Year 2016/17. Imports grew by 27.4 percent, following a 30 percent expansion in Fiscal Year 2016/17. Exports also expanded, by 15.5 percent, but this growth applied to a low base (exports comprised 3.1 percent of GDP in Fiscal Year 2017/18).