Nepal’s Economic Growth Projected at 3.7% After Rasuwa Flood: World Bank

Nepal’s economic growth is expected to slow to 3.7% in fiscal year 2083/84 following the devastating Rasuwa flood, according to the World Bank. The flood, which occurred on Bhadra 10, disrupted industries and services, with damage to hydropower, solar energy, electricity transmission and transport infrastructure expected to weigh on economic activity.

In its latest Nepal Development Update, titled Rebuilding Differently for the Future, the World Bank said economic activity is expected to improve as reconstruction and recovery work progresses. Growth is projected to rise to 5.2% in fiscal year (2084/85).

The industrial sector is expected to face the biggest impact as damage to infrastructure affects electricity generation, production and the movement of goods. The services sector is also likely to be affected by disruptions to trade, transport, tourism and financial activities. While the overall impact of agricultural damage on national output is expected to be limited, the flood is likely to significantly affect the livelihoods of people in the affected areas.

The World Bank has urged Nepal to use the reconstruction process to build infrastructure that can better withstand future disasters. It has also called for stronger early warning systems and a more integrated social protection system to provide faster support to families affected by disasters.

The World Bank also projects South Asia’s economy to grow by 6.9% in 2026, supported by strong domestic demand, before slowing slightly to 6.7% in 2027. The report further highlighted artificial intelligence as a potential new source of growth in the region, particularly through higher productivity, expanded export opportunities and improved public services in areas such as health, education and agriculture.