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The Asian Development Bank (ADB) has revised the estimated growth rate of Nepal in 2026/27 to 3.9 percent, based on the growing electricity production by hydropower plants.

In its signature publication ‘Asian Development Outlook 2026’ unveiled recently, the multilateral lending organization has raised the possible economic growth of Nepal by 1.2 percent. Previously, it had estimated the figure at 2.7 percent in its publication issued in April 2026.

The new estimate, released in July, is expected to be higher than the April estimate, amid pressure on the South Asian economy from the ongoing conflict in the Middle East and the resulting disruptions in energy markets.

The report states that Nepal's growth rate is likely to improve this year due to strong activities observed in the hydropower sector. The ADB has projected that the consumer price inflation will also be eased to 3.2 percent, down from its earlier projection of 3.7 percent.

The ADB, however, estimates that Nepal’s economic scenario will be challenging for 2027. It has reduced the growth rate forecast for 2027 from 5.0 percent to 4.5 percent. Likewise, inflation is also projected to rise to 5.0 percent in 2027/28 due to rising fuel prices and growing domestic demand.

The ADB has estimated that the growth rate will decrease as the conflict in the Middle East may reduce tourist arrivals and affect Nepali workers going for foreign employment.