A report on "The Economic and Social Survey of Asia and the Pacific 2007", carried out by UNESCAP has estimated that Gross Domestic Product (GDP) of Nepal would grow by around 4 percent in 2007.
The report said that the GDP grew by an estimated 1.9 percent in 2006 and there were possibilities of achieving this growth in consonance with the changed political situation of the country.
"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 added.
The report also said that the inflation rate increased by 3.5 percent in 2006 and reached to 8 percent in 2006 due to rise in petroleum and food prices.
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, the report said.
"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 suggested.
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