World Bank projects Nepal's growth to slow to 3.7 per cent in its Nepal Development Update

6 October 2026

The World Bank's latest half-yearly Nepal Development Update projects slower growth for Nepal. Real output is expected to grow 3.7 per cent in the current fiscal year, FY27, down from 3.9 per cent in the year just ended, with flood damage to hydropower, transmission and transport making industry the main drag on growth. Growth is projected to pick up to 5.2 per cent the following year as reconstruction gathers pace. The report also records some unusually strong external numbers: inflation at 3.1 per cent, a record low and below the central bank's five per cent ceiling, a current account surplus worth 14.0 per cent of GDP, and remittances equal to 35.8 per cent of GDP. Foreign exchange reserves stood at 25.3 billion US dollars, enough for 19.6 months of imports. On the weaker side, the gross non-performing loan ratio reached a record 5.7 per cent and capital spending execution fell to a record low of 46.8 per cent. The Bank put recovery and reconstruction needs after the flood at about 4.8 billion dollars.