Kathmandu, April 11 (IANS) The Asian Development Bank (ADB) has projected that Nepal's economy will grow at a slower pace of 4.9 per cent in Fiscal Year (FY) 2018 from 6.9 per cent in 2017.

In its "Macro-Economic Update Report" released here on Wednesday, the Asian lender projected that there was a slight upward revision of the 4.7 per cent growth forecast published in its September 2017 edition, reflecting better-than-expected harvest despite floods in mid-August.

The higher forecast hinged on the assumption of normal monsoon and acceleration of ongoing mega projects, Xinhua news agency reported.

According to the preliminary data of the Ministry of Agricultural, land Management and Cooperatives, paddy production will fall to 5.1 million tonnes, a decrease of 1.5 per cent from a year earlier this fiscal year.

However, the production of other summer crops was expected to increase in 2018 compared to 2017.

"Even with increased capacity utilization of industries, industrial growth is set to be lowering in 2018 from the high rate in 2017, due to low investment in the manufacturing sub-sector for years owing to political instability and structural bottlenecks," said the statement issued by ADB Nepal.

The report mentioned that the service sector will however remain buoyant given the expansion of wholesale and retail trade, financial intermediation and travel and tourism sub-sectors.

Average annual inflation was expected to rise moderately to 5.5 per cent in 2018 from 4.5 per cent in 2017. This was below the inflation target of 7.0 per cent set by the central Nepal Rastra Bank.

likewise, revenue collection increased by about 21 per cent year-on-year in the first seven months of 2018 compared to a year earlier period. The report further stated that import growth outpaced export growth leading to a widening trade deficit.

--IANS

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