As the government meets to discuss an increased budget for the coming fiscal year, it has to hand varying forecasts for GDP growth, which mostly remain around the 6% level.
The Asian Development Bank’s outlook is the least optimistic projecting GDP to grow by 5.6%, which is notably lower than the government’s revised target of 6.5%.
While this remains above average in the current world economy, all observers agree the country could perform much better and achieve a growth rate closer to 8% if necessary reforms were undertaken.
The government needs to improve infrastructure and restore long-term political stability to guard against factors that threaten to slowdown GDP growth rates.
In this regard, it is welcome that the government is promising to invest in new infrastructural developments and has talked to the World Bank about plans to enhance regional connectivity, including two hoped-for hydropower projects with Bhutan, India and Nepal.
It is also encouraging that the World Bank has pledged to provide a record $2.8bn in funds to support education, health and poverty alleviation programs. These are important to encourage inclusive and broad-based economic growth.
To move the country on to a higher growth path however, policy-makers must prioritise reforms, such as lowering bureaucratic hurdles and trade barriers, to enable the private sector to productively attract and make the best use of investment.
By focusing on improving education, investing in infrastructure and providing a better investment climate, the economy can be freed from artificial obstacles which hamper or limit opportunities for growth.
