Banking News – The Asian Development Bank (ADB) has projected Nepal’s economic growth rate to reach 4.4% in 2025, while forecasting a regional growth rate of 4.9% for Asia. The projections were published in ADB’s latest report, Asian Development Outlook (ADO) 2025, released today.

According to the report, ongoing geopolitical tensions, the United States’ newly announced tariff policies, and overall global trade uncertainty are expected to weigh heavily on both growth and inflation trends across the Asia-Pacific region.

Following the implementation of new U.S. tariff rates, ADB warns of a heightened sense of uncertainty in global trade. The Bank forecasts that regional economic growth will moderate to 4.7% in 2026, down from 4.9% in 2025.

ADB also projects regional inflation to ease slightly, from 2.6% in 2024 to 2.3% in 2025 and 2.2% in 2026. However, inflation in Nepal is expected to remain relatively high, with forecasts of 5.2% in 2025 and 5% in 2026.

The report attributes part of the inflationary pressure in Nepal to supply chain disruptions caused by floods and landslides in October 2024.

Despite external challenges, Nepal’s economic growth is projected to rise to 5.1% in 2026, supported by recovery efforts and domestic policy reforms.

The ADB cautions that full implementation of the U.S. tariff hikes and potential future shifts in U.S. trade policy could further dampen economic prospects in the region. Additionally, tensions in the Middle East, rising global food and energy prices, and ongoing risks from the Russia-Ukraine war are identified as key threats to economic stability.

Expansionary fiscal policies in some economies, ADB warns, may also contribute to rising inflation in the near term.