Macroeconomic Update: Nepal (September 2020)

Nepal’s economy is anticipated to expand by  mere 1.5% in FY2021, down from preliminary estimate of 2.3% in FY2020, primarily owing to continued stringent measures to contain the spread of COVID-19 and expected sharp economic downturn in neighboring India—Nepal’s predominant trade partner.  Average inflation edged up to 6.2% in FY2020 and is forecast to moderate to an average of 5.5%. The current account deficit is expected to widen to –1.9% in FY2021 as import growth marginally picks up and remittance inflows decline owing to a slowdown in global demand from this crisis.

This edition's Theme Chapter sheds light on Nepal’s journey of digital development with specific recommendations for e-commerce promotion. Despite some notable progress, limited internet connectivity, lack of advanced information technology devices, and technical knowhow have held back Nepal’s aspiration toward greater digitalization.