Sunday, 24 October, 2021

Recovery And Growth

Nepal’s economy is poised to grow by 4.1 per cent in the fiscal year 2021/22, forecasts a report published by the Asian Development Bank (ADB). If the report is anything to go by, the country is set to emerge from the pandemic and things will change for the better. It paints a largely sanguine picture of the country’s economy for the coming year. The projected growth is a decent one compared with 2.3 per cent in the year before, and shows the country is on the path to economic recovery. As more and more people are getting vaccinated and the coronavirus transmission rate as well as cases have steeply declined, the government has lifted many pandemic-related restrictions. That has bolstered confidence in people to revive the business activities.

Still, a lot hinges on the ongoing vaccination campaign. The more people are vaccinated, the better will be the outlook for the economy. So, in order to prevent any setback in the economic gains, vaccination must go ahead unhindered. The report also says that a better part of that growth is contributed by the increase in the paddy production, mainly because of the abundant rains. This year the country has been witnessing heavier-than-usual rainfall, providing the much-needed boost for the agriculture sector, which forms the lion’s share of the economy. The downside is that the rain-triggered landslides and floods have damaged many critical infrastructures like roadways. That can impede the activities essential to bolster the economy. The government should give enough attention to this issue to ensure that the roadways are up and running.

The industrial output is predicted to grow notably, thanks to the rise in domestic demand for goods. The surge of export has injected confidence into the economy battered by the pandemic. Because better part of the world’s population has already been vaccinated or is about to get one, country after country is opening up its economy, boding well for the entire world. That’s because many of our countrymen are employed in these parts of the world, and the remittance sent home by them provides lifeline to the national economy. As the nation has seen a rise in the hydropower generation, it will be importing less fuel. At a time when the price of oil has been rising by leaps and bounds, threatening to reverse the economic gains, we will be spared of its consequences. This is because rise in fuel price makes price of everything – from household items to heavy equipment – expensive. But increased hydropower will enable us to offset that to some extent.

At the same time, opening up of our economy has sent a message that the country is safe for the tourists to visit. That means we will see the arrival of tourists on par with the pre-pandemic level. That hotels, travel and tours, and other tourism businesses will see good days ahead is also clear for all to see, since many of them have already reopened their doors to the tourists. The only worrying thing for now is the inflation rate. But the good news is that it is likely to rise only modestly – 5.2 per cent. The high economic growth doesn’t mean much if inflation stays at a high level. So, taming inflation should feature among the top priorities of the government. Equally important for us is to narrow down the ever-widening trade deficit.