The multilateral funding agency said in its Nepal Development Update launched on Thursday that industrial growth is likely to be supported by construction activities, investments in the cement and hydropower sectors, and improved capacity utilisation in the manufacturing sector.

The update said that import growth would slow down as the government implements its programmes to check fiscal deficit. This should help contain the trade deficit, the World Bank said, adding that inflation is expected to pick up slightly but will remain below 5 percent during the forecast period assuming stable agricultural production, regular supply of electricity, and low inflation in India. The focus going forward will need to be on strengthening exports, it said.

“Increased exports will be critical to sustained growth over the medium-term. It will be important for the government to continue with reforms to attract foreign investment,” said Kene Ezemenari, World Bank Senior Economist, who led the team that produced the update. “To effectively support Nepal’s growth aspirations, future reforms will need to be grounded in strong analysis and data,” she added.

The update highlights the importance of data for development, particularly in the context of the country’s historic transition to federalism. Federalism has created a surge in demand for more and better data. “The need for Nepal is data that is disaggregated, more frequent, reliable and accessible,” said Finance Minister Yuba Raj Khatiwada.

“Nepal’s federal structure has added another dimension for data at the provincial level, which is a challenge but very important for development programmes to leave no one behind.”

In its Special Focus section, the report articulates a vision for a future data ecosystem and the need for short-term reforms to make the most of existing data and long-term reforms that establish an enabling environment that fosters data sharing, integration and use.

“Data is central to the success of federalism. Nepal needs a vision and strategy for a future data ecosystem that is aligned to the new federal structure and promotes engagement of civil society and the private sector,” said Faris Hadad-Zervos, World Bank Country Manager for Nepal.

“Engaging all data actors – including civil society, the private sector and government agencies at various levels – can play a greater role in data production, sharing and use. This would help in the design of reforms for better service delivery to citizens and an improved business and investment climate.”