Nepal’s economic outlook in 2077: Pessimistic but towards recovery

KATHMANDU: Nepal’s economy had to suffer a lot in 2077 especially due to the spread of COVID-19 pandemic. As the government imposed nationwide lockdown from March 11 last year to contain spread of the COVID-19, this brought the economy into standstill as business activities were completely shut for several months.

According to the Central Bureau of Statistics (CBS), the economic growth turned negative by 1.99 percent in the last fiscal year as a result of COVID-19. This is the fourth time in the history of Nepal that the economic growth has been negative, but the negative growth of last fiscal year is still high in terms of percentage.

A study carried by the National Planning Commission (NPC) showed that  the infrastructure and transport sector alone had to bear Rs 54.22 billion loss due to the pandemic while tourism is among most affected industry. Despite all these, country’s economy is slowly and gradually recovering.

Here are few highlights of Nepal’s economy in 2077 BS:

a) Nepal’s economy contracted for the first time in the last fiscal year 2019-20 in nearly four decades due to the slumped economic activities amid lockdown imposed to prevent the spread of COVID-19. The Central Bureau of Statistics (CBS), the central statistics body of the Nepali government, said its revised estimate showed that Nepali economy contracted by 1.99 percent in fiscal year 2019-20 that ended in mid-July last year.

b) After a long wait, Melamchi’s water has been brought to the Kathmandu Valley in 2077. Out of 170 million liters, only 85 million liters of water is being distributed at present. President Bidya Devi Bhandari and Prime Minister KP Sharma Oli formally inaugurated the preoject a few days ago.

c) Altogether 72 megawatt of electricity was added in the national grid in 2077. The energy sector has become a hot topic this year. Nepal Electricity Authority (NEA) Executive Director Kulman Ghising was dismissed amid demands for his reappointment. As the pandemic affected domestic production of electricity, country had to import energy even in 2077. India also approved the procedure to import electricity from Nepal and other countries with its energy trade agreement, which has laid the groundwork for the export of electricity produced in Nepal next year.

d) The year 2077 proved to be a good year for digital technology. This year alone, the number of users using digital payments has increased significantly, with users of QR codes and mobile banking more than doubling. According to the NRB, more than 635,000 transactions were made through QR code in March and the transaction amount has exceeded Rs 2.55 billion.

e) Remittance inflow remained normal in 2077 despite the pandemic. Nepalis  in abroad sent remittances of around Rs 891 billion in the first 11 months of 2077 BS. It was estimated that remittances would decrease by 10 to 15 percent due to COVID-19. But contrary to the projection, remittances continued to increase.

f) The Balance of Payment (BoP) remained at surplus in every month in 2077 BS.

g) The year 2077 was proved a good year for the share market. The share market crossed the previous high of 1,881 points and set a new record. Along with the Nepse indicator, a new record has been set in terms of transaction amount, number of shares and market capitalization.

h) Price of petroleum products surged notably in 2077. Price of petroleum products is on constant rise in recent months. In fact, fuel price has gone up multiple times in a single month.