Revised projections
In its April 2026 Asian Development Outlook, the ADB forecasts Nepal's economic growth at 2.7 percent for fiscal year 2026, significantly below the previous year's 4.6 percent estimate. This follows earlier projections in 2025 that had expected a gradual strengthening of growth to 4.4 percent in fiscal 2025 from 3.9 percent in 2024, before the scale of political upheaval became clear. ## Drivers of slowdown
Analysts point to political instability around the 2025 Gen Z protests, policy uncertainty during the interim administration, and structural constraints such as low productivity, infrastructure gaps, and out-migration as key drags on investment and private sector confidence. Recent data showed quarterly GDP rising by roughly 3 percent year-on-year in mid-2025 but contracting on a seasonally adjusted basis compared with the previous quarter, with 13 of 18 industrial sectors slipping into negative territory. ## Broader significance
A weaker growth path narrows fiscal space for ambitious welfare or stimulus programmes and heightens pressure to improve project implementation, tax administration, and governance in state-owned enterprises. For the new leadership that rode a wave of anti-corruption and youth anger into office, aligning reformist rhetoric with credible macroeconomic management will be central to avoiding disillusionment among its core supporters.