Peace pays off for Nepal

A lasting peace has not yet been concluded

A ceasefire in Nepal's civil war is likely to set the economy on the growth track once again, a government report has forecast.

The kingdom's economy should grow by 2.4% in the 2002/03 fiscal year, the finance ministry predicted, making up for the modest contraction suffered in 2001/02.

That dip, the first economic reverse for Nepal in two decades, was due to the effects of a seven-year uprising by Maoist opponents of the monarchy.

Despite an apparent lack of understanding between the two sides, a peace deal was signed at the beginning of this year, and the crucial tourist industry has already benefited, the ministry said.

Keep growing

Nepali growth this year is still being held back by the global stagnation in tourism, and in particular the effect of the deadly Sars virus on travel to Asia.

But the predicted performance is robust enough: the services sector, which is almost entirely made up of tourism and related activities, is expected to grow by 2.5% this year, after having contracted by a similar amount last year.

Agriculture, the mainstay of the Nepali economy, is likely to grow at a far slower pace.

Much now depends on whether a more lasting peace can be hammered out.

Government and rebels have held two rounds of talks, so far without a lasting deal being signed.

In all, the revolt has cost more than 7,200 lives.