Floods drag Nepal growth forecast lower

Kathmandu The World Bank on Tuesday lowered Nepal’s economic growth projection for fiscal year 2026-27 to 3.7% from its earlier estimate of 4.2%, citing the damaging impact of devastating floods that struck the Himalayan nation in August. In its latest Nepal Development Update, titled Building Back Differently for the Future, the World Bank said the floods are expected to weigh on economic activity through disruptions to energy, transportation, trade and tourism. The energy sector, particularly hydropower, has emerged as the most significant channel of economic impact. The floods affected 12 hydropower projects, including seven operational facilities with a combined capacity of 256.1 MW and five projects under construction with a combined capacity of 395.02 MW. A 25 MW solar facility was also affected. Damage to transmission infrastructure disrupted an additional 149.6 MW, taking the total affected generation and transmission capacity to about 430.7 MW. This represents around 10.6% of Nepal’s installed hydropower and solar capacity in fiscal year 2025-26. Transportation and trade have also suffered because Nepal’s domestic and international commerce is concentrated along a limited number of key corridors. The floods damaged communities and infrastructure along the Bhotekoshi and Trishuli river corridors. According to Nepal’s National Disaster Risk Reduction and Management Authority, 1,455 people have been confirmed dead and 5,285 remain missing following the disaster. A Rapid Disaster Needs Assessment estimated physical damage at 274.48 billion Nepali rupees, while total losses and damages reached 408.28 billion rupees, highlighting the scale of the economic reconstruction challenge facing the country.