KATHMANDU, Oct. 7: The World Bank has projected Nepal’s economy to grow by 3.7 per cent in fiscal year 2026/27, citing disruptions to industry and services caused by the devastating Bhotekoshi flood of August 26.
The forecast is below the estimated 3.9 per cent growth in 2025/26 and 4.4 per cent recorded in 2024/25.
In its Nepal Development Update: Building Back Differently for the Future , released Tuesday, the World Bank said reconstruction and rehabilitation could lift growth to 5.2 per cent in 2027/28. The recovery, however, will depend on the speed and scale of reconstruction.
Industry is expected to bear the greatest impact because of extensive damage to hydropower, solar energy, electricity transmission and transport infrastructure. The damage will constrain power generation, production and movement of goods.
Trade, transport, tourism and financial activity are also expected to suffer. Agricultural losses may have a limited effect on overall output but could seriously affect livelihoods in disaster-hit areas.
The World Bank said the disaster also provides Nepal an opportunity to rethink infrastructure development, particularly transport connectivity, energy, water, sanitation, health and education, with greater emphasis on climate resilience.
It recommended that reconstruction go beyond replacing damaged infrastructure. Future investment should incorporate updated assessments covering floods, landslides, debris flows, glacial hazards and river dynamics, including risks of cascading failures across infrastructure networks.
The report called for stronger early warning systems and an Integrated Social Protection System capable of quickly delivering assistance to vulnerable households after disasters.
“The World Bank stands ready to assist the authorities in investing in systems and implementing the right policies to help put Nepal on a more resilient and sustainable development path,” said David Sislen, World Bank Division Director for Maldives, Nepal and Sri Lanka.
Separately, the World Bank’s South Asia Economic Update projected regional growth of 6.9 per cent this year before slowing to 6.7 per cent in 2027.
The report said artificial intelligence adoption is accelerating across South Asia, with the potential to raise productivity, expand exports and improve public services, particularly in health, education and agriculture
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Editor-in-Chief: Pushpa Raj Pradhan Consultant Editor Emeritus: Mana Ranjan Josse Contributing Editor: Prof Dr Shashi P.B.B. Malla Managing Editor: Sushma Shrestha Chief Reporter: B.N. Dahal Legal Consultant: Bachu Singh Khadka Computer Layout: Shankar Aryal
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