A UN report has estimated that the GDP of Nepal will grow by around 4 percent in 2007 thanks to positive development in the country.

The Economic and Social Survey of Asia and the Pacific 2007, released by the UNESCAP said that the GDP grew by an estimated 1.9 percent in 2006, adding, “The recent peace agreement has, however, brought new hope and Nepal is expected to return to a new phase of sustained growth and development.”

The report also said that the inflation rate has increased by 3.5 percent in 2006 and reached to 8 percent in 2006 due to rise in petroleum and food prices.

The report further said that the fiscal situation remained weak with growing recurrent expenditure, low capital spending and a high budget deficit, which increased to 4.3% in 2006 from 3.4% in 2005.”

“Reform needs to be maintained to sustain high growth and rapid poverty reduction. With fiscal adjustment still a challenge, more progress is needed in tax collection and resource mobilization to reduce large budget deficits,” the report recommended.

On regional perspective, the report said that the economy of the Asia Pacific region grew by 7.9 % in 2006 up from 7.06 % in 2005. The report also said that the inflation rate will be 3.8 percent in 2008.

“The region is losing US$ 42-47 billion per year because of restrictions on women’s access to employment opportunities and another US$ 16-30 billion a year because of gender gaps in education,” the report further said.