ADB Projects Nepal's Economic Growth to Slow to 2.7 Percent in 2026

Kathmandu. The Asian Development Bank (ADB) has released a projection that Nepal's economic growth rate will be limited to 2.7 percent in 2026. According to the 'Asian Development Outlook April 2026' published by the ADB, this rate is lower than the 4.6 percent recorded in the previous fiscal year.

According to ADB Country Director for Nepal, Arnaud Cauchois, economic growth is expected to slow due to political uncertainty, the Gen-Z movement last Bhadra, and the ongoing conflict in the Middle East. Emphasizing that political stability would help advance reform programs and boost economic confidence, Cauchois noted that risks remain due to the impact of the Middle East conflict on oil prices, tourism, and remittances.

The report estimates that the economic growth rate will reach five percent in the next fiscal year. As current obstacles gradually diminish, improvements in domestic demand, growth in hydropower exports, and the revival of the tourism sector are expected to support the economy.

According to the ADB, the inflation rate is projected to be 3.7 percent in the fiscal year 2082/83 and is expected to rise to 4.5 percent in 2083/84. It is noted that the expansion of domestic economic activities will put further pressure on prices.

The current account surplus is estimated to reach 7.2 percent of the GDP in the fiscal year 2082/83, compared to 6.7 percent in the previous year. Despite moderate growth in remittances and exports, some pressure is expected due to a temporary decline in foreign employment, increased import costs caused by high oil prices, and potential declines in tourism revenue. The current account surplus is projected to drop to 5.3 percent in the next fiscal year.

The report mentions that the overall economic situation remains highly uncertain, identifying the prolongation of the Middle East conflict, weak implementation of the capital budget, risks in the financial sector, and climate-related disasters as major challenges. Additionally, it is noted that fluctuations in international oil prices and potential declines in remittances from Gulf countries could create further risks.