November 10: The International Monetary Fund (IMF) has concluded that the uncertainty faced by world economy still persists. It says that due to prolonged uncertainty, interest rates have increased worldwide and inflationary pressure remains intact.

In an event held in Kathmandu, Teresa Daban Sanchez, the resident representative of the IMF for Nepal said that the rising prices have become a matter of concern for all countries.

In a report published by IMF, it is estimated that inflation in countries including the US is aggressively rising and may continue to rise. The report warns that most of the countries will be hit by higher prices due to the sluggish recovery after COVID-19. Sánchez said the world economy has been pushed towards uncertainty due to the tightening of the global financial situation, the negative impact of the Russia-Ukraine war and the rising prices of commodities.

Amid uncertainty, IMF has projected that Nepal's economy to grow by 5 percent in the fiscal year (FY) 2022/23. This year, Nepal's current account deficit is expected to be 6.3 percent of the GDP. Meanwhile, the government's economic growth target for the current fiscal year is 8 percent. The government assured that inflation will not go above 7 percent this year. 

According to the IMF, the economic growth rate of the world in 2022 will be 3.2 percent. During this period, India, China, and Japan will make economic progress at the rates of 6.8 percent, 3.2 percent, and 1.7 percent, respectively.

Similarly, in 2023, the growth of global economy will be 2.7 percent. In 2023, while the economic growth rate in Asia will be 4.3 percent, India will progress by 6.1 percent, China by 4.4 percent and Japan by 1.5 percent.

The report concludes that prices are increasing more in low-income countries and that the rate of price hike may increase further.

According to the IMF, there is a need for major reforms in the economic policy to remove the uncertainty in the economy. It also pointed out that risks may arise due to export restrictions imposed by China and trading partners and natural and climate-related disasters.