As political stir intensifies and conflict continues to take its toll on key economic sectors, Nepal is unlikely to meet its projected growth target of 4.5 percent in 2006, a UN survey report said Friday.

"The Nepali government is also unlikely to meet revenue and capital spending targets in the year," the latest report of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said.

"Rise in oil prices, decline in export of ready-made garments and intensified civil strife will also slow down the economic growth rate," said the Economic and Social Survey of Asia and the Pacific for 2006, which was launched here by the United Nations Information Center.

The survey, among others, projected the country's exports to India to rise. "Yet the benefits of this will be offset by stagnant production for the domestic market," the report said.

It also predicted the overall balance of payments to decline.

The report projected inflation to rise moderately in 2006, owing to slowing monetary expansion and the appreciation of the Indian rupee, to which the Nepalese rupee is pegged, against the U. S. dollar.

As for the country's performances on the economic and social fronts, the report said that economic growth of Nepal decreased by 1.1 percentage point to 2.6 percent in 2005, leaving the country with one of the lowest real gross domestic product (GDP) rates in the Asia-Pacific Region.

The report noted the poor performance of monsoon-dependent agricultural sector, weak showings in the industrial and textile sectors and a slump in tourism as a result of continued social unrest.

The survey said the Nepali stock market was a rare success story for the country in 2005, remaining "buoyant" despite political instability, and recorded significant growth in the market capitalization of listed companies, from 8.4 percent of GDP to 11.6 percent.

The report indicates Nepal's outstanding external debt fell from 47 percent of GDP to 44.5 percent during 2005.

Source: Xinhua