Rasuwa floods: World Bank forecasts 3.7 per cent growth in Nepal

The World

Bank expects economic activity to improve and the growth rate will reach 5.2 percent in the coming fiscal year 2027÷28 as the reconstruction and rehabilitation activities after the floods increase. According to the World Bank’s ‘Nepal Development Update: Building Back Differently for the Future’ report released on Tuesday, the industrial sector will be most affected by the floods.

The report states that the industrial sector will be the main obstacle to economic growth as the damage to hydropower, solar energy, electricity transmission and transport infrastructure will affect electricity production, industrial activities and movement of goods. The World

Bank estimates that the service sector will also be affected by the disruption of trade, transport, tourism and financial activities. Although the impact of the damage to agriculture on the overall economic growth is relatively limited, the impact on the livelihood of the people in the affected areas will be significantly affected, according to the report.

David

Sislane, World Bank Division Director for the Maldives, Nepal and Sri Lanka, said that the huge human and economic damage caused by the floods should be used as an opportunity for Nepal to rethink its infrastructure development model.

“This is an opportunity for Nepal to rethink its basic services such as connectivity, energy and water, sanitation, health and education,” he said, adding that resiliency and alternative capacities should be at the center of infrastructure planning and investment in the face of the changing climate and nature of risk. “

The World Bank has suggested that the damaged structures should be rebuilt in a new way keeping in mind the risks rather than rebuilding the damaged structures as they are.

The report calls for a new assessment of multi-disaster risk, a review of the location and design of infrastructure, and the enhancement of alternative capacity in critical networks of transport, energy and communications. The World Bank has also suggested that the disaster early warning system should be strengthened and an integrated social security system should be developed to provide immediate relief to the vulnerable families.

According to the World Bank, post-flood reconstruction activities can become a new basis for economic growth. But for this, infrastructure reconstruction should be linked to the risk of floods, landslides, glacial lake explosions and other disasters in the future.

South Asia’s growth rate is 6.9 percent

The South Asia Economic Update, released along with the development update on Nepal, has projected South Asia’s economic growth rate to be 6.9 percent in 2026. The World Bank estimates that the regional economy will remain resilient despite global economic risks due to strong domestic demand. In 2027, South Asia’s economic growth rate is projected to slow to 6.7 percent. The report points to the use of Artificial Intelligence (AI) as a significant opportunity for South Asia’s upcoming economic growth. Although the use of AI is still low in South Asia compared to developed economies, its use is growing rapidly, according to the World Bank. Franziska Onsorge, Chief Economist for Asia at the World Bank Group, said that AI has the potential to boost labour productivity, expand export opportunities, and improve public service delivery. But for this, the World Bank suggests that barriers to the use of AI in small businesses should be removed along with skilled manpower development, business-friendly environment, physical and digital infrastructure improvements. In addition, the report says that there should be a clear regulatory framework to encourage local AI innovation and ensure data security and privacy.