Nepal's economy to grow by 4.9% in FY2018: ADB

Brenda Watkins
April 12, 2018

Workers lay out steel bars in constructing the 8-kilometre 4-lane elevated highway along Buendia Avenue in Makati City, Manila, on Aug 3, 2017.

The Asian Development Bank raised Asia's 2018 economic growth estimate to 6.0% from 5.8% earlier, citing solid export demand, however, US protectionist measures and diminishing capital flows could undermine trade and impact overall growth of the region. Domestic investment recorded 9.0 percent growth last year, moderating from a brisk 23.7 percent a year before, although growth in fixed investment in industrial machinery, transport equipment, and public construction remained robust.

Risks to the growth outlook are driven mainly by "fears of escalating trade tensions", it said, referring to China-U.S. trade tensions that have threatened to escalate into an all-out trade war.

Since President Donald Trump at the start of March imposed tariffs on steel and aluminium imports as part of his protectionist "America First" agenda, China and the United States have swapped tit-for-tat tariff threats on goods worth hundreds of billions of dollars.

The ADB said Myanmar's youthful workforce would continue to attract FDI to labor-intensive, export-oriented industries but added with concern that the government's FDI regulations were, despite some recent liberalization, still more restrictive than most of its peer economies in the region.

It expects the economy to maintain that pace through this year and even top 7 percent by 2019, so long as the government can manage reforms to improve the business environment.

The bank said that on average the Asian economies will grow six percent this year and five-point-nine percent next year.

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China has set a growth target of around 6.5% this year, the same as last year, which it handily beat with an expansion of 6.9%. ADO is ADB's flagship annual economic publication.

For 2019, it predicts growth will ease to 5.9 percent.

With economic growth gaining momentum, inflation is projected to reach 4.0 percent this year as global oil and food prices rise, and higher excise taxes on some commodities take effect.

Ranked in the middle are Indonesia (5.3% and 5.3%) and Malaysia (5.3% and 5%).

The ADB report also sees India reversing two years of declining growth trend and the economy recovering to grow at 7.3 per cent in this fiscal (2018) and 7.6 per cent in the next fiscal (2019) aided by growth-oriented policy measures.

Banking reform and corporate deleveraging are also taking hold, which could reverse a downtrend in investment, the bank said.

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