January 11: Nepal’s economic growth rate would remain at 5.1 percent in the current fiscal year and 4.9 percent in FY 2023/24, according to the latest report published by the World Bank.    

The ‘Global Economic Prospect Report’ unveiled by the World Bank (WB) on Tuesday came up with the forecast just days after the newly formed government unveiled its common minimum programme with tall promises of achieving economic growth in double digits.

As per the WB’s estimation, economic growth rate would be slashed not only in Nepal but also across the globe.    

According to the report, global growth is projected to slow to its third-weakest pace in nearly three decades, overshadowed only by the 2009 and 2020 global recessions.

“Investment growth in emerging market and developing economies is predicted to remain below its average rate of the past two decades. Any additional adverse shocks could push the global economy into recession,” said the report, adding, “Small states are especially vulnerable to such shocks because of their reliance on external trade and financing, limited diversification, elevated debt, and susceptibility to natural disasters.”

The report suggested that immediate policy action is needed to bolster growth and investment, including redirecting existing spending, such as agricultural and fuel subsidies.

According to the report, global economic growth rate would be squeezed to 1.7 percent in the year 2023 which is 1.3 percentage points lower than the earlier estimate.    

World Bank President David Malpass emphasized that the crisis facing developments is intensifying. He noted that the latest growth forecasts indicate a sharp, long-lasting slowdown, with global growth declining to 1.7 percent in 2023 – roughly half the rate expected just six months ago.

The deterioration is broad-based: in virtually all regions of the world, per-capita income growth will be slower than it was during the decade before COVID-19, he said.

Six months ago, the WB had made a public estimation of global economic growth rate of 3.0 percent.    

The ongoing war between Russia and Ukraine and COVID-19 pandemic have been considered the main causes behind the lower economic growth rate, the economic prospect report noted.    

High price hike, high interest rate and disruption in the supply chain have been identified as other causes behind the fall in the economic growth rate.    

The WB report further stated that, “The estimation of economic growth rate for the year 2023 is the third big recession in the last three decades”.    

According to the report, India would see the economic growth rate of 6.6 percent in the fiscal 2023 and 6.1 in the fiscal 2024. Likewise, Pakistan would witness the economic growth rate of 2.0 percent in the fiscal year 2023 and 3.2 in 2024. Bangladesh would have the economic growth rate of 5.2 percent in the fiscal 2023 and 6.2 percent in 2024, the WB report reveals.