Asia Regional Integration Center

The economic recovery after the devastating earthquake in 2015 is well underway with growth rebounding to 7.4% in fiscal year (FY) 2017, brought by normalized trade flows, favorable monsoon and expansive fiscal policy. The growth in paddy production of 21% eased inflationary pressures. Fiscal policy was largely expansionary, funding recurrent and capital expenditures.

The economy is likely to grow by 5.9% in FY2018 due to rapid expansion of government expenditure, which in turn catalyzed a marked pickup in industry, mostly in manufacturing and construction. Primary risk to outlook is the possible substantial fall in remittances as reflected by the expansion of trade deficit.