The empty seats in Thamel restaurants on Christmas Eve were a sign of the dismal year Nepal has had (and also of the equally dismal one to come). A year in which political uncertainty and anarchy ruled, and we slid closer to economic doldrums. A year when government apathy made businesses insecure about the future of their investments.
The favourable monsoon did provide some relief and had a positive impact on the GDP, but farmers had a difficult time getting a good price for their produce. Wealth creation at the grassroots has suffered. Industrial growth has been virtually absent with no major manufacturing units coming up. Banks and financial institutions have been plagued with problems of excessive liquidity and the weakness of regulatory mechanisms has actually led to a regressive financial situation. Exports to India have increased marginally-certainly not enough to have a serious impact on the balance of payments. Relentless Nepal-baiting by the Indian media has created a scenario not conducive to official trade across the border.
Foreign investments have dwindled and no major investment has been recorded this year. The experience of two power companies has been enough to keep many prospective investors away. By creating problems Nepal has made it clear that foreign investment is not welcome. The Nepali business community still prefers protectionism and shows solidarity in putting off foreign investment of any kind.
This has been a terrible year for governance and the actions of political parties have seriously affected the economy. The tourism industry will take some time to recover from the frequent strikes and threats of strikes. The security of investments made by the private sector in the field of education is also a matter of concern and the fear of a spillover effect on the health sector looms large. Myopic government policies in the transport and aviation sectors have led to more complications. Lip-service is continually paid to privatisation, but only one state-owned enterprise was privatised in the whole year, and that too amidst a lot of controversy.
Business-government relations have soured this year due to the debate on VAT and perceived government indifference to critical issues. The administration needs to be reformed, but the government is neither looking at improving institutional frameworks nor bringing about legislative changes conducive to the expansion of business.
The donor community has remained confused this year, and bi-lateral and multilateral agencies have preferred to watch rather than act. It seems that most of them are thinking of gradually withdrawing rather than attempting interventions in the transformation of this country.
There's been a small increase in spending-falling real estate prices and lower interest rates have slightly increased spending on consumer goods. Few avenues for saving and strong media campaigns have also contributed to growth in the white goods category.
Corruption in all walks of life increased meteorically this year with corruption making inroads horizontally and vertically. Back-alley economic activities are thriving, at the cost of serious and transparent businesses.
The best comes last: two good things did happen this year. The stock market came back to life, and bidding for the cellular telecom licence was great.
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