KATHMANDU, Nov. 1 (Xinhua) -- Nepal's economy should grow by at least 7-8 percent sustainably to become a middle income country by 2030 as targeted by the Nepali government, the World Bank said in a report released here on Thursday.
Business as usual will not be sufficient to accelerate the growth and achieve the target for the Himalayan country, whose average annual growth rate over the last decade stood at 4.3 percent, according to the report titled "Nepal Development Update."
Nepal's economy grew by 6.3 percent in the fiscal year 2017-18 that ended in mid-July. The World Bank has projected growth rate of 6 percent in the current fiscal year 2018-19.
In order to achieve 7-8 percent of growth, Nepali government has targeted a 10 percentage point increase in investment rate by 2021. "But, this can only happen with a shift from remittance-led and consumption-based growth to one that is investment and productivity driven," the report said.
Nepal is basically an import-driven economy. It witnessed a trade deficit of 37.7 percent of gross domestic product (GDP) in the fiscal year 2017-18. The country relies heavily on remittance for financing imports as its size is as high as 25.1 percent of GDP as of last fiscal.
There has been a gradual shift of Nepal's economy towards investment driven growth lately, according to the report. Nepal's economy is expected to grow by an average rate of 6 percent in the medium term driven primarily by total investment.
During the launch of report, Nepali Finance Minister Yubaraj Khatiwada said the government has been working on policies and reforms to strengthen the investment ecosystem, create a suitable climate for foreign direct investment and encourage the private sector to achieve their productive potential.
World Bank Country Director for Nepal, Bangladesh and Bhutan Qimiao Fan said the Nepali government would have to continue taking proactive and transformative steps to attract investments to drive its development.