Nepal continues to slide into extreme poverty according to 2015-2016 growth forecast
The Asian Development Bank released its annual Outlook yesterday. In 2015-2016, growth will be only 1.5 per cent, lower than last year’s (3 per cent) when the quake hit. Short-sighted economic policies, corruption, slow reconstruction, and India’s embargo are among the main factors. Experts look favourably on Nepal’s rapprochement with China.
Kathmandu (AsiaNews) – The annual Outlook report by the Asian Development Bank (ADB), released yesterday, found that rising corruption, political instability, slow post-earthquake reconstruction and recovery, disruption in trade and transit, unfavourable monsoon-based agriculture have pushed Nepal’s economy on a downward spiral with rising market prices, unemployment, and greater poverty.
Overall, Nepal’s economic growth rate is expected to be 1.5 percent in the fiscal year 2015/16. The rate was 3 per cent last year despite the earthquake that killed almost 9,000 people and affected 90 per cent of the capital’s buildings.
The “growth rate is expected to pick up to 4.8 per cent in the next Fiscal Year 2016/17 through the stabilisation of political climate, acceleration of reconstruction, and normal monsoon favouring agricultural growth," said Kenichi Yokoyama, ADB Country Director for Nepal, said at the Outlook’s launch.
“We understand and are able to identify the problem but can’t control it until the government takes stern action and fixes its policies,” said Yubraj Khatiwada, National Planning Commission deputy chairman. “We suggest the government control the market by stopping black market activities and cheating. If the government cannot control it, starvation and malnutrition may be spread.”
Similarly, “The government must take serious action to protect the lives of poor and marginal people,” said Prof Biswambhar Pyakurel, a senior economic expert. “Minorities and politically neutral people are the main victims of the current situation.”
ADB has called for urgent action to speed up reconstruction and development programmes to prevent a further slowdown in economic growth. "Economic growth is possible only through a speedy reconstruction drive and focusing on sectors like energy, tourism and agriculture," the Country Director Yokoyama said.
Nepal is experiencing an unfavourable economic situation, not only because of last year’s earthquake, but also because of short-sighted policies. In fact, eight months after it was set up, the National Reconstruction Authority is not yet operational, but it has come in for criticism and allegations of corruption.
At the same time, the inflation rate has shot up, from 7.2 per cent in 2014-2015 to 12.1 per cent in January 2016, following India’s export embargo. For this reason, the ADB is in favour of Nepal’s recent rapprochement with China, which could bring in new foreign capital.