ADB projects Nepal's economic growth to slow to 2.7% in FY2026, recovery to 5% expected in FY2027
Summary
Nepal's economic growth is projected to slow to 2.7% in fiscal year 2026 due to political uncertainties and the Middle East conflict, with recovery expected to 5% in FY2027 driven by domestic demand, hydropower exports, and tourism.
Key Points
- ADB projects Nepal's economic growth to slow to 2.7% in FY2026 from 4.6% in FY2025 due to political uncertainties and the Middle East conflict.
- Economic growth is expected to rebound to 5.0% in FY2027 driven by stronger domestic demand, hydropower exports, and tourism recovery.
- Inflation is projected to rise from 3.7% in FY2026 to 4.5% in FY2027 with current account surplus widening in FY2026 before moderating in FY2027.
- Downside risks include prolonged Middle East conflict, financial sector vulnerabilities, climate hazards, and oil price volatility affecting remittances.
