Macroeconomic Update: Nepal (April 2013)

Date: April 2013
Type: Country Planning Documents
Country:
Nepal
Subject:
ADB administration and governance; Economics; Finance
Series: Economic and Political Updates

Description

This first edition of Nepal's Macroeconomic Update analyzes the latest update on the state of the country's real, fiscal, monetary and external sectors and presents a review of the latest full budget for Fiscal Year (FY) 2013.

Findings

Some of the Macroeconomic Update's findings include:

  • Gross Domestic Product (GDP) growth modestly picked up to 4.5% in FY2012 on the back of strong agriculture harvest and robust services sector growth;
  • GDP growth in FY2013 is estimated to be around 3.5%, largely due to the unfavorable monsoon, the shortage of chemical fertilizer during peak planting season, and the deceleration of remittance inflows;
  • In the first half of FY2013, overall expenditure was 6.3% lower than the level in the corresponding period in FY2012;
  • Inflation inched up to double-digits throughout most of the year. The jump in prices is attributed to both high food and beverages prices, and non-food and services prices;
  • Inflation is expected to hover around 10.5% in FY2013;
  • The growth in deposit mobilization by the banking sector was lower than the growth of credit leading to liquidity constraints;
  • The external sector saw a rapid deterioration due to the deceleration of remittance inflows; and
  • Quantum and quality of capital spending needs to be ramped up because it will not only affect employment creation, but also revenue mobilization, development activities, and overall economic growth.

Background

Produced by ADB's Nepal Resident Mission, Macroeconomic Update is published twice a year.

Contents

  • Executive Summary 
  • Macroeconomic Update
    • Real Sector 
    • Fiscal Sector
    • Monetary Sector
    • External Sector
  • Issue Focus: Need to Accelerate Capital Spending
  • Appendices
    • Appendix 1: Country Economic Indicators
    • Appendix 2: Country Poverty and Social Indicators