The World Bank’s latest Nepal Development Update predicts a gradual economic recovery for the country from the Covid crisis in fiscal year 2021. Easing of social distancing, rollout of vaccines for priority populations and good monsoon harvests are expected to create economic growth of 2.7%.
The report outlines export promotion, attraction of Foreign Direct Investment (FDI) and reducing trade costs as some measures to achieve export competitiveness for successful economic recovery. Nepal’s annual merchandise exports could increase 12 times to $9.2 billion. This is why the country is missing out on creating 220,000 jobs, says lead author of the report, Kene Ezemenari.
Imports and remittance are expected to recover slowly while exports remain stagnant. Revenue performance will stay weak as spending rises on vaccines, economic relief and development projects. Industrial activity is projected to remain below pre-pandemic levels until fiscal year 2022.
However, tourism may not recover properly without readjusting to a post-Covid market. With a full recovery only expected in fiscal year 2023, planners have a slim time frame to make tourism more sustainable.