Nepal’s economic growth is estimated to slow down to 4.1% in Fiscal Year (FY) 2023, down from an estimated growth of 5.8% in FY2022. The main reasons are tight monetary policy, slackened domestic demand, the withdrawal of COVID-19 stimulus, and global headwinds. Agriculture growth will likely moderate to 2.0% in FY2023, while services growth will also moderate to 4.4% from 5.9% in FY2022. Industry growth is expected to decelerate as import restriction measures, higher interest rates, and a dampened external demand affect manufacturing and construction subsectors. Nepal’s inflation is forecast to edge up to 7.4% in FY2023 from 6.3% in FY2022, despite the tight monetary policy reigning in demand. However, the current account deficit is estimated to narrow to 4.0% of GDP in FY2023, supported by declining trade deficit amidst buoyant remittance inflows. For FY2024, inflation is expected to decelerate to 6.2%, and the current account deficit is predicted to moderate to 3.9%. The Asian Development Bank is committed to supporting Nepal’s economic growth by accelerating capital budget spending through focused investment planning, financial management, and project readiness.