ADB projects 4.4 %economic growth for Nepal in 2025

Kathmandu: The Asian Development Bank (ADB) has projected that Nepal’s economy will grow 4.4 percent this year, up from 3.9 percent in 2024.

The Asian Development Outlook (ADO) April 2025, launched on Wednesday, states that growth in Nepal is expected to accelerate in both 2025 and 2026. It is projected to increase from 3.9 percent in 2024 to 4.4 percent in 2025 and 5.1 percent in 2026. Robust consumption supported by higher remittance inflows, moderate inflation, and increased private and public investments will underpin Nepal’s economic activity.

Nepal’s inflation is estimated to be at 5.2 percent in 2025 and 5 percent in the following year. According to the report, the economies in developing Asia and the Pacific are projected to grow 4.9% in 2025, down from 5.0% last year. Solid domestic demand and strong global appetite for semiconductors driven by the artificial intelligence boom are supporting growth, but tariffs and trade uncertainty will act as a headwind. Regional growth is expected to decline further to 4.7% next year.

ADB said Inflation is projected to moderate to 2.3% this year and 2.2% next year as global food and energy prices continue to decline. The growth forecasts were finalized before the 2 April announcement of new tariffs by the US administration, so the baseline projections only reflect tariffs that were in place previously.

However, ADO April 2025 does feature an analysis of how higher tariffs may affect growth in Asia and the Pacific. The report notes that while economies in the region are resilient, faster and larger-than-expected changes in US trade and economic policies pose risks to the outlook. Along with higher US tariffs, increased policy uncertainty and retaliatory measures could slow trade, investment, and growth.

The region will be challenged by rising trade barriers and significant trade uncertainty, but solid domestic demand and electronics exports will support growth. Regional growth is forecast at 4.9% in 2025 and 4.7% in 2026. Inflation will moderate to 2.3% in 2025 and 2.2% in 2026 as global commodity prices decline further, enabling many regional central banks to ease monetary policy, the report states.

Escalations in conflict and geopolitical tensions could hamper regional prospects. The ADB said,’ although conflict and geopolitical tensions in the Middle East have eased, the outlook remains highly fragile. Downside risks for the region could materialize if conflict escalates again, which could lead to supply chain disruptions, higher and more volatile food and energy prices, and elevated global economic uncertainty and risk aversion.’

It further said, ‘Risks also remain regarding prospects for an end to Russia’s war in Ukraine. While economies in the Caucasus and Central Asia could benefit from greater economic stability and investor confidence, the realization of these gains remains highly uncertain and subject to the terms of any proposed peace deal.’

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