Nepal’s economy is expected to experience a significant boost, with projected growth rising to 5.1% in the fiscal year 2025, compared to 3.9% in FY 2024. This increase is primarily driven by anticipated improvements in tourism, hydropower production, and paddy cultivation, according to the World Bank’s latest economic report, Nepal Development Update: International Migration and Well-being in Nepal, released today.
The private sector is set to play a key role in this economic recovery, aided by recent monetary policy easing by the central bank and reduced regulatory barriers. Looking ahead, the economy is projected to expand by 5.5% in FY 2026. However, the report also warns of potential risks, including rising non-performing loans, investment-deterring policy changes, delayed capital expenditures, and regional instability that could affect tourism and domestic demand.
Vice Chairman of the National Planning Commission, Prof. Dr. Shiva Raj Adhikari, stressed the importance of improving capital expenditure and completing ongoing projects to strengthen macroeconomic stability and create jobs. The report also highlights the challenges in migrant-receiving countries like the Gulf Cooperation Council and Malaysia, which could slow growth and reduce remittance inflows, a key factor in poverty reduction and human capital development. The report calls for an inclusive migration management system to support sustainable development by helping returnees and fostering transparency.