Policy Uncertainty Dragging Nepal's Economy, NRB Study Warns
A new Nepal Rastra Bank (NRB) study has found that economic policy uncertainty significantly weakens Nepal's economy by reducing GDP growth, discouraging investment, slowing bank lending, and increasing volatility in the stock market. The report emphasizes that predictable policies and clear communication are essential to maintaining investor confidence and ensuring long-term economic stability.
A new study by the Nepal Rastra Bank (NRB) has found that economic policy uncertainty is weakening Nepal's economy by discouraging investment, slowing economic growth, and increasing volatility in the stock market. The report, based on data from 2011 to 2026, estimates that a rise in policy uncertainty could reduce Nepal's real GDP by around 2 percent, while the NEPSE index may fall by 5–10 percent. It also highlights negative impacts on private sector lending and imports. The study identifies annual budgets, monetary policy announcements, political changes, foreign exchange pressures, and major events such as the COVID-19 pandemic as key sources of uncertainty. NRB recommends predictable policymaking, transparent communication, and a stable investment environment to strengthen investor confidence and support sustainable economic growth.