IMF Lowers Nepal’s Economic Growth Forecast by 2.2 Percentage Points

The Asia Pacific Department Director of the IMF, Krishna Srinivasan, has announced that Nepal’s economic growth forecast has been revised down from 5.2% to 3%. The IMF projects the Asia Pacific region’s economic growth to be 4.4% in 2026. The report highlights rising chemical fertilizer costs in Nepal, Laos, and Myanmar, which is expected to reduce farmers’ incomes. Kathmandu, April 18 – The International Monetary Fund (IMF) has downgraded Nepal’s economic growth forecast for the current fiscal year by 2.2 percentage points. Previously, in October, the IMF had estimated a 5.2% economic growth rate, but now the projection has been revised to only 3% growth this year.

The IMF attributes the slowdown in Nepal’s growth to ongoing tensions in the Middle East and the youth movement that occurred in Nepal last September. The economic growth forecast for the upcoming fiscal year 2027 has also been lowered by 0.5 percentage points, now set at 4.6%. Thomae Helbling, IMF Deputy Director, has expressed the IMF’s readiness to assist Nepal amid these challenging circumstances.

The IMF warns that ongoing Middle East tensions will further increase inflationary pressures. Rising chemical fertilizer costs are expected to reduce farmers’ incomes and drive up food prices. Increases in petroleum product prices will raise transportation costs, which will ultimately affect food preparation costs as well. IMF Director Krishna Srinivasan emphasized that Asia will continue to lead the world in economic growth.

Inflation in Asia is projected to reach 2.6% in 2026, higher than last year’s 1.4%. The IMF cautions that the prolonged energy crisis could reduce this region’s total gross domestic product (GDP) by 1 to 2% by 2027. To control inflation, the IMF recommends implementing dynamic monetary policies and allowing foreign exchange rates to be determined by market forces.