News Analysis: Nepal sees economic revival after successful holding of CA polls
KATHMANDU, Dec. 6 (Xinhua) — Nepal’s economy, long hobbled by prolonged wrangling among the nation’s political leaders, has begun to show signs of recovery following the successful holding of the Nov. 19 constituent assembly (CA) polls.
One positive economic indicator of the return of confidence among local and foreign investors was the behavior of the Nepal Stock Exchange (NEPSE) whose index rose by more than 100 points in just a span of one week.
The index had shot up by 33.88 points (5.64 percent higher) within a single trading day last Thursday, the first trading day after the polls and had closed at 634.3 points. In Thursday’s trading, the index surged to 707.41 points.
The increment in NEPSE index during the period of one week is the highest since Aug. 31, 2008.
During this period, market capitalization in Nepal went up from 6.43 billion Nepalese rupees (64.9 million U.S. dollars) to 7.17 billion rupees (72.4 million U.S. dollars). With the boast in market capitalization, the total capital of shareholders has increased by 68 billion rupees (686 million U.S. dollars), the highest figure recorded so far.
Stakeholders said factors like successful holding up of the CA polls, the lead position taken by Democratic Party (Nepali Congress) in the polls, and the high expectations of the successful drafting of Nepal’s constitution boosted investors’ confidence and the surge in NEPSE indices is just an expression of this confidence.
“The upcoming government should strive to keep these positive developments so that the economy could be revitalized,” economist Chirinjavi Nepal told Xinhua.
The stock market is the main indicator of the vitality of the economy of any given country. When more investors put their money in the market, it means they have confidence in the country’s economy.
“The zeal seen in the stock market is already a manifestation of Nepal’s economic revival,” Nepal said.
Also an economic adviser to country’s Finance Minister, Nepal said the government should not squander this renewed confidence which the country has not experienced for a long time.
“The formation of a new government and its concentration towards solving the political crisis along with prioritizing the economic agenda will certainly help in keeping the investors’ high spirits,” Nepal said.
The 1.2 million investors in the secondary market have begun showing courage and are hoping that the stability would last. The secondary market had been vibrant following the first CA election in 2008.
On Aug. 31, 2008, the NEPSE index jumped to 1,175 points, an all-time high in the country’s history. It, however, suffered a continuous decline as the country became embroiled in political infighting.
During the last six years following the first CA election, Nepal approved only two annual budgets on time. Because of poor industrial and investment environment and the delay in budget announcement, Nepal’s economy grew only 4 percent on average during the last few years.
About 25 percent of Nepalis still live below the poverty line while more than 1,000 youths are forced to leave the country to seek employment abroad.
The new government should endeavor to resolve an emerging political unrest, brought about by the threats by losing parties in the election, in order to keep the momentum of growth, Nepal said. Enditem