ADB's Chief Economist, Albert F. Park, commends Nepal for its progress in reducing poverty and emphasizes the importance of focusing on productivity and job creation. The suspension of development grant assistance from the US has created a crisis, particularly affecting

Nepal's health and education sectors. Park's visit is crucial for Nepalese officials as they navigate these challenges.

In his statements to the media, he advised governments in the region to exercise restraint in responding to increased US tariffs and to maintain a commitment to open trade and investment in order to build resilience against potential shocks, such as unexpected policy changes from the new US administration.

Despite the uncertainty, Nepal's economic growth is projected to reach 4.8 percent in 2025 with a moderate level of inflation. Positioned between China and India, Nepal has significant opportunities for economic expansion. Park, the chief of ADB's economic department, believes that Nepal benefits from its strategic location between two rapidly growing economies.

He stated that the growth in FY2024, which ended in mid-July 2024, was accelerated by the services sector, particularly tourism, increased hydropower generation, and higher paddy output.

Impact of US Policy

He mentioned that the aggressive US policies would result in a 0.3% annual growth slowdown in the PRC, with varying effects on other Asian economies, some of which may benefit from it.

“There will be an increase in activity this year as domestic demand continues to recover, electricity production and exports rise, and tourism receipts strengthen further.”

Average inflation in FY2024 was moderated due to lower non-food and services prices. Inflation is expected to decrease further as international oil prices and inflation in India decline.

He highlighted important trends that are shaping medium-term prospects, mentioning that higher US interest rates for an extended period could increase debt vulnerability, along with geopolitical tensions and global fragmentation.

He also pointed out the impact of climate change, biodiversity loss, and the green transition, as well as increased digitalization, automation, the rise of AI, and rapid urbanization. The global growth is expected to slow slightly in 2025-2026, driven by factors such as lower net migration and tariffs in the US.

Additionally, he mentioned that the weak property market in China, tariffs, and forecasts of lower oil prices in 2025-2026 due to weaker global demand and higher US oil production. According to the ASIAN DEVELOPMENT OUTLOOK 2024, other commodity prices may also ease, with the possibility of negotiations and ceasefires on various fronts, as well as improved weather conditions.

He emphasized that higher US interest rates for an extended period could have inflationary effects and increase debt, indicating that global financial conditions may not ease significantly.

During his visit, Albert F. Park, ADB’s Chief Economist and Director General of the Economic Research and Development Impact Department, commended policymakers in Nepal for their efforts in reducing poverty in the country over the past two decades.

During his 4-day visit to Nepal, Park conducted meetings with Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel and Governor of Nepal Rastra Bank Maha Prasad Adhikari. Park acknowledged Nepal's progress in reducing poverty but highlighted challenges for achieving sustainable, long-term growth. He emphasized the need for Nepal to transition from a remittance-dependent economy to one focused on productivity and job creation, with priorities including increasing foreign direct investment, enhancing infrastructure, adopting technology, integrating with global markets, and boosting exports.

The Government of Nepal expressed gratitude for ADB's support as a key development partner.

Park also engaged with the media to discuss global and regional economic prospects, noting that Developing Asia is expected to maintain a steady growth rate of 4.8% in 2025, with South Asia leading at 6.3%. He mentioned that potential changes in U.S. trade, immigration, and fiscal policies could impact the outlook, but any effects would likely be gradual and limited, primarily manifesting in the latter part of 2025.

Park is currently the Chief Economist and Director General of the Economic Research and Development Impact Department (ERDI). With over 20 years of experience as a development economist, he is a renowned expert on the economy of the People's Republic of China. His expertise covers a wide range of development issues, including poverty, inequality, intergenerational mobility, microfinance, migration, labor markets, the future of work, and foreign investment.

Park is currently on leave from his role as Chair Professor of Economics, Social Science, and Public Policy at the Hong Kong University of Science and Technology (HKUST).

He was also a founding director of HKUST's Institute for Emerging Market Studies and Center for Economic Policy, and has previously held faculty positions at the University of Oxford and University of...

He was a founding director of HKUST’s Institute for Emerging Market Studies and Center for Economic Policy and had previously held faculty positions at the University of Oxford and University of Michigan. Mr. Park, a U.S. national, earned his bachelor’s degree in economics from Harvard University and his doctorate in applied economics from Stanford University.

He mentioned that Asia's growth is expected to remain strong in 2025, with inflation likely to decrease. The region will experience steady growth despite changes in global policies.

Developing Asia is forecasted to grow at a steady rate of 4.8% in 2025, with South Asia leading as the fastest-growing sub-region at 6.3%.

Inflation in the region is expected to be around 2.6%. Changes in U.S. trade, immigration, and fiscal policies could have an impact on the region's economic outlook.

As the effects of potential U.S. policy changes are still uncertain and may be gradually implemented, their impact is likely to be felt more in the second half of 2025.

Despite the progress made, there are other risks to consider, such as increasing geopolitical tensions, fragility in the PRC property market, robust activity, and the outcome of the U.S. elections, which have influenced views on the pace of Federal Reserve easing.