Global growth is picking up and thegrowth in the South Asia region continues to remain strong.A recovery in industrial activity has coincided with apickup in global trade, after two years of marked weakness.Growth in South Asia remains strong, with regional outputprojected to grow by 6.8 percent in 2017 and an average of7.2 percent in 2018–19. Economic activity in Nepal, whichrebounded strongly in FY2017, reaching 7.5 percent(year-over-year [y/y]) following two challenging years, hasagain been impacted by severe flood affecting more thanone-third of the country. High inflation in the last twoyears induced by disruptions moderated sharply by early 2017and further slowed, reaching decade-low inflation by the endof FY2017, due to moderating inflation in India.